Massive network operation: Vietnamese police smash MLM scam!

Massive network operation: Vietnamese police smash MLM scam!

In a sweeping crackdown on illegal business practices, Phu Tho provincial police have uncovered and dismantled a major multi-level marketing network that counts nearly 200,000 members. Among these, 107,348 are Vietnamese citizens, while the rest come from abroad. The network, which traded in functional foods in particular, was suspected of containing banned substances. The illegal profits amounted to thousands of billions of dong, highlighting the scale of the fraud. Bitney Vietnam Investment Trading Company Limited, founded in September 2019 with an original capital of VND10 billion, is the focus of the investigation. Its legal representative and director, Tat Van Hao, was also arrested. He was born in 1977 and is of Chinese descent.

The company was forced to reduce its capital to VND100 million last year, 2024 to be precise. Bitney House Company Limited, founded in May 2022, experienced a similar reduction. It also reduced its capital from VND13 billion to VND100 million. The products of these companies were advertised on various platforms that are no longer accessible. Advertising, on the other hand, took place intensively on social media platforms such as Facebook, Zalo and YouTube.

Violations and Warnings

Between 2022 and 2023, Bitney Vietnam Investment Trading Company Limited was warned multiple times for illegal activities. In June 2023, the Ministry of Industry and Trade pointed out unlicensed multi-level marketing activities related to the Multi Juice and Lucenta products. Multi Juice was advertised as having exaggerated health benefits, while Lucenta was touted as an aid to various illnesses. However, the company was unable to provide a valid certificate of registration for its multi-stage sales activities.

The legal consequences of the case are already being felt. As of May 14, four people, including Tat Van Hao and Malaysian citizen Lim Choon Foong, had been arrested for violating multi-level marketing regulations.

Several companies collapsed

The Bitney investigation is part of a broader trend in Vietnam, where several companies with similar practices have collapsed. News platform VNExpress reported that two companies in Hanoi, G10 International Commercial Franchise Co Ltd and Med Media Co, recently submitted business cessation applications to the Ministry of Industry and Trade after achieving poor results. Another company, Khang Loi Thai Co Ltd, had already stopped all multi-level marketing activities since November. This also applies to Thien Ngoc Minh Uy, whose license was revoked in 2017 for illegal activities; An estimated 17,000 investors were left without compensation after the collapse.

The Ministry of Commerce also revoked the licenses of five other companies that did not comply with Vietnamese multi-level marketing laws. In recent years, these have been associated with pyramid schemes under the guise of multi-level marketing, which has defrauded many people. In April last year, investors reported falling victim to Ho Chi Minh City-based startup Modern Tech, which was embroiled in a cryptocurrency pyramid scheme and committed a fraud worth an estimated VND15 trillion, affecting around 32,000 people.

These incidents shed critical light on the practices of multi-level marketing companies in Vietnam and show that the authorities are committed to cracking down on illegal activities in this area.