Consequences For Violating Sales Promotion Laws

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Enterprises conducting acts of violation while engaging in promotional activities may face administrative penalties and/or additional sanctions, requirement to take remedial measures, or suspension of promotional activities depending on the severity of such acts.

1. Administrative penalties

According to Decree No. 185/2013/ND-CP providing the penalties on administrative violations in commercial activities, production of and trading in counterfeit or banned goods and protection of consumer rights, fines ranging from 10 million to 50 million VND shall be imposed on the violating enterprises, contingent on the levels of violations. Specifically: 

  • A fine between 10 million and 20 million VND shall be applied to acts of violation such as: Failed or improper compliance with provisions on methods of announcing information required to be publicly notified when conducting sales promotion; Failure to publicly organize a prize draw for a promotion of chance or holding one without the presence of customers; or Failure to inform competent authorities of promotions of chance whose total prize valued from 100 million VND and above.
  • Enterprises shall be fined with 20 million to 30 million VND if committing more severe violations, e.g. employing third parties to carry out promotional activities without an agreement; untruthful contents submitted to state authorities; or promotional discounts exceeding the permissible maximum level of discount prescribed by law.
  • Breach of prohibiting regulations shall result in a fine of 30 million to 50 million VND, for instance: promotion of banned goods or services; dishonest or perplexing promotional activities with the purpose of deceiving customers; promotion to consume unqualified goods which are detrimental to the environment and human health or contrary to the culture, ethics, habits and customs of Vietnam.

The aforementioned fines shall increase by 2 times in case the violations are carried out in two or more provinces or cities under central authority.

Representative offices, who independently conduct sales promotions or hire another company to do so, shall be fined with 10 million to 20 million VND if violating sales promotion regulations. 

A financial penalty from 60 million to 80 million VND shall be imposed on enterprises whose promotional activities are implemented for the purpose of unfair competition, specifically:

  • Fraudulent prize promotions;
  • Untruthful sales promotions or ones that give customers false impression about the promoted goods or services for deceptive purpose;
  • Discrimination towards customers in different locations during the same sales promotion;
  • Trial goods are offered to customers in exchange of those of the same type produced by other enterprises that they are currently using.

The fine mentioned above shall be increased to between 80 million and 100 million VND if the violations are committed in two or more provinces or cities under central authority. Simultaneously, exhibits, means used to commit acts of violation, and profits earned from such acts shall be confiscated from the breaching enterprise; a public rectification must also be filed.

2. Suspension of promotional activities and confiscation of exhibits

Part of or the entire promotion may be suspended when a violation is committed, including implementation of prohibited acts or failed or insufficient compliance with the promotion’s rules registered with competent authorities.

Even when their promotional activities are suspended, enterprises are still obliged to fulfill all commitments made with customers who joined such activities; except for the following cases, in which the entire promotion is required to be suspended and all exhibits are confiscated:

  • Use of unqualified goods and services or those prohibited or restricted from business or not allowed to be circulated or supplied;
  • Promotion or use of liquor and beer for promotion towards citizens under 18;
  • Promotion or use of tobacco and liquor with alcohol degree of 30 or more for promotion; use of medicines for any form of promotion.

3. Remedial measures

Forced destruction of promoted goods or goods used to promote other goods and services banned or restricted from business, goods not permitted to circulate, services not permitted to be supplied, or unqualified goods as provided for by law.    

Forced cancellation of previously drawn prizes and re-organization of a new prize draw in case the former ones weren’t held in public or held without the presence of customers or weren’t informed to competent authorities when the total value of prizes of the promotion was worth 100 million VND or more.

Forced submission of illegal profits gained from collecting fees when providing customers with sample products or trial services and from failure to remit 50% of the announced prizes’ value to the State Budget in case no winner is found.

PLF Law Firm 

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