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Vietnam: Heavier Fines for Illegal E-Commerce Activities

(Dec. 14, 2015) A new decree issued by Vietnam’s government on November 19, 2015, amends several articles of a 2013 decree that imposes penalties for administrative violations in connection with commercial activities, the manufacture of and trading in counterfeit or banned goods, and the protection of consumers’ interests.  The new decree punishes various acts that violate e-commerce practices and also provides for the imposition of fines for cigarette smuggling, improper use of business licenses, and business operation violations.  It is scheduled to enter into force on January 5, 2016.  (New Regulation Sets Heavier Fines Against E-Commerce Swindlers, VIETNAM LAW & LEGAL FORUM (Dec. 5, 2015); Decree No. 124/2015/ND-CP, Socialist Republic of Vietnam Government Portal website (in Vietnamese) (click on “124.signed.pdf”); Vietnam Decree No.: 185/2013/ND-CP on Providing the Penalties on Administrative Violations in Commercial Activities, Production of, Trading in Counterfeit or Banned Goods and Protection of Consumer Rights (Nov. 15, 2013), VIETNAM LAW IN ENGLISH.)

Violations in Connection with E-Commerce

The amending decree provides that enterprises that establish mobile applications for the sale of goods online or provision of e-commerce services must notify or register with the Ministry of Industry and Trade; otherwise they will be subject to payment of a heavy fine.  Most of the sanctions prescribed for the mobile sales app violations are similar to the punishments currently prescribed for e-commerce website violations.  “Specifically, a fine of VND 1-5 million [about US$44-$222] will be imposed on enterprises failing to make proper notification and registration dossiers, disclose their information in a proper manner, or protect customers’ personal information in e-commerce.”  (New Regulation Sets Heavier Fines Against E-Commerce Swindlers, supra.)

Enterprises that fail to provide information to state authorities or to assist those authorities in investigating illegal business activities carried out on e-commerce websites or e-commerce service apps or that fail to take steps to remedy their illegal business conduct after such conduct is detected or reported will face a fine of VND50 million (about US$2,223).  The same penalty applies to enterprises that set up online business and marketing networks for participants who contribute money to buy services and to receive commissions or monetary rewards.  (Id.)  A similar fine, of VND40-50 million, applies to businesses “that take advantage of assessment, supervision and certification in e-commerce to make illicit profits, or deliberately continue their business operation after having their registrations terminated or their licenses for assessment, supervision and certification in e-commerce revoked”; they will also have their licenses revoked.  (Id.)

Cigarette Trade Violations

The new decree doubles penalties for activities related to illicit trade in tobacco.  Reportedly, the  trade in smuggled cigarettes constitutes 20% of the Vietnamese cigarette sales market, with 85% of the illicit goods being Jet and Hero brands, which are said to “contain chemical substances at unusually high levels, especially Coumarin, one of [the] main substances in rat poison.”  (Khanh Tran, Vietnam Doubles Penalty for Illicit Tobacco Trade, VIETNAM INVESTMENT REVIEW (Dec. 1, 2015).)  Most Jet and Hero cigarettes, said to be made in Indonesia, are smuggled into the country from Cambodia.  (Vietnam Says Popular Smuggled Cigarettes Are Toxic, THANH NIEN NEWS (Sept. 18, 2014).)

The decree prescribes that anyone found to have conducted trade in illicit cigarettes will face a fine of VND500,000 to 1 million (about US$22-$44) when the violation involves less than ten packs of illicit cigarettes.  The fine will be VND1 to 2 million ($44-$89) for trade in 10-20 packs and up to VND50 to 70 million (about US$2,223-$3,112) for 400-500 packs.  (Tran, supra.)

If more than 500 packs are traded, the activity will be considered for criminal prosecution; if the prosecutorial authority decides against a criminal prosecution, the offenders will be subject to a fine of VND70 million-VND100 million (about US$3,112-$4,446).  (Id.; see also in general Law on Prevention and Control of Tobacco Harms, Law No.  09/2012/QH13, Vietnam Steering Committee on Smoking and Health website.)