Thien Ngoc Minh Uy, infamous for duping Vietnamese consumers into joining its multi-level marketing network, has requested to stop operating as a pyramid firm, raising doubt whether they really want to withdraw from the lucrative business.
Thien Ngoc Minh Uy was fined a total of VND1.5 billion (US$66,964) by Vietnam’s Ministry of Industry and Trade in 2016 for 80 separate offences, before being hit with an additional fine of VND215 million ($9,598) earlier this year.
The offences include breach of the contracts it signed with network members, failing to meet the level of required training for new members, operating without notifying the local authorities and violating label regulations on its goods.
The trade ministry has said it would handle all violations concerned with the pyramid company strictly; however, Thien Ngoc Minh Uy has recently filed a petition to withdraw from the multi-level marketing scheme, meaning the ministry is also completing procedures to approve their request.
According to the law, once officially able to cease operating its ‘pyramid’ scheme, Thien Ngoc Minh Uy is still required to fulfill all of their obligations to the members of its network.
Given the said violations by Thien Ngoc Minh Uy, the trade ministry has transferred the case file to the investigative police unit under the Ministry of Public Security, which will take a final decision on whether to criminally punish the company.
Old wine, new bottle?
While multilevel marketing is legal in Vietnam, fraudulent variants of the scheme have fooled people with promises of easy money, before eventually scamming large sums of cash from them.
In 2015, Vietnam’s multilevel marketing sector reported more than VND7 trillion ($312.5 million) in revenue, with 1.4 million distributors receiving a total of VND2.1 trillion ($93.75 million) in commissions, according to the Ministry of Industry and Trade.
In most network marketing firms, salespeople not only sell their products, but also encourage others to join the company as distributors. Participants will from then on not only receive commissions for the sales they generate, but also for the sales of the other distributors they recruit.
While people hope that the withdrawal from the multi-level marketing industry by Thien Ngoc Minh Uy will save many from falling victim to the same ‘easy money’ trap, some remain skeptical about the unusual move by the pyramid marketing firm.
It has been speculated that the withdrawal is just another strategy by which Thien Ngoc Minh Uy can continue to attract members to its network, a tactic known as ‘old wine in a new bottle.’
On Tuesday, Thien Ngoc Minh Uy announced on its Facebook page that the trade ministry was handling its request to stop its multi-level marketing operations, accompanied by an outline of its new business model.
The company said it would become a holding company with multiple subsidiaries operating in various business sectors, including multi-level marketing.
This means that while Thien Ngoc Minh Uy will not officially be involved in the multi-level marketing sector, one of its subsidiaries will be a pyramid firm, recruiting new members on behalf of the parent company.