Understanding Vietnam's penalty framework for false advertising - Doing Business in Vietnam

Understanding Vietnam’s penalty framework for false advertising

Doing Business in Vietnam Legal Articles

30/10/2023

It is even more important to ensure that advertising is accurate and not misleading. False advertising can not only harm consumers but also face serious legal liability, etc. Learn about false advertising, its legal implications, and penalties.

1. What is false advertising?

According to the Law on Advertising (2012), false advertising can be understood as advertising that is incorrect or misleading about the business capabilities, ability to provide products, goods, and services of business organizations and individuals that selling products, goods and services; Regarding quantity, quality, price, utility, design, packaging, brand, origin, type, service method, warranty period of registered or announced products, goods and services.

2. Administrative penalties for false advertising

Administrative sanctions are the most commonly applied form of punishment for advertising violations of the law. Depending on the type of violation and the specific type of product being advertised, businesses that carry out false advertising will be fined in monetary terms ranging from 60,000,000 VND to 80,000,000 VND for an individual and from 120,000,000 VND to 160,000,000 VND for organizations.

Besides, there may also be additional sanctions such as:

Deprivation of the right to use the product announcement registration receipt for 5 to 7 months;
Revocation of the right to use the Certificate of Advertising Content Confirmation from 22 months to 24 months;
Remedial measures such as forced rectification of information.

3. Penalties for unfair competition

Currently, fraudulent advertising accounts for a high proportion of unfair competition cases. Violations can be advertising that deceives information or confuses customers about price, quantity, quality, uses, etc., or imitates advertising of other products to confuse customers.

According to the Competition Law (2018), violating enterprises may be fined from 200,000,000 VND to 400,000,000 VND and be subject to one or more additional forms of sanction such as revocation of the right to use licenses or practice certificates for a limited period of time or suspension of operations for a limited period of time; Confiscation of exhibits and means used to commit administrative violations of competition; Confiscation of profits gained from committing violations.

Besides, Remedial measures can be applied in forms like forced public rectification or removal of infringing elements on: goods, goods packaging, business means, and items.

4. Apply civil remedies for false advertising

Subjects subjected to false advertising include consumers and businesses selling products that compete with the advertised products. In Vietnam, businesses that commit false advertising can be sued in court under the non-contractual compensation procedure due to the negative impact of advertising on consumers and other businesses. The Law recognizes claiming compensation as a right to protect the legitimate interests of both, traders and consumers, thus in order to fulfill these obligations, a liability to compensate damages can be applied along with other legally approved forms of punishment.

5. Criminal penalties for false advertising

For acts of false advertising, if there are enough elements to constitute a crime, they can be criminally punished according to the Criminal Code (2015) for false advertising with the following penalties:

Any person who falsely advertises goods or services, has been administratively sanctioned for this act or has been convicted of this crime, has not yet had his criminal record erased but continues to violate it, shall be fined from VND 10,000,000 to VND 100,000,000 or non-custodial reform for up to 3 years.
Offenders may also be fined from VND 5,000,000 to VND 50,000,000, and banned from practicing certain occupations or doing certain jobs for a period between 1 and 5

In conclusion, maintaining accuracy and honesty in advertising is not only a moral obligation but also a legal obligation of every business and individual participating in the market. False advertising not only affects a business’s reputation but can also harm consumers and illegal. Therefore, enterprises need to pay special attention to complying with the law on advertising, to ensure a healthy and fair business environment.