News analysis · October 26, 2020
Vietnam fake goods penalties: what Decree 98 changes
Vietnam fake goods penalties got a new rulebook this month. Decree 98/2020/ND-CP took effect on October 15, 2020. It sets the fines for making or selling counterfeit goods, trading in smuggled goods, and breaking consumer protection rules. The Government signed it on August 26, 2020. It replaces three older decrees: 185/2013/ND-CP, 124/2015/ND-CP and 141/2018/ND-CP.
The short version is simple. Fines depend on the value of the goods or the profit made. Food, medicine and cosmetics cost more. Companies pay double what an individual pays. Here is how it works.
The ceilings: how high can a fine go?
Article 4 of the decree sets a hard cap on each type of case. For making or selling counterfeit and banned goods, the most an individual can be fined is 200 million dong. For an organization, the cap is 400 million dong. That is about US$17,000 for a company.
For ordinary trade and consumer protection breaches, the caps are lower. They are 100 million dong for an individual and 200 million dong for an organization.
The fines listed in the decree are written for individuals. When a company breaks the rule, the fine is doubled. A few named articles are exceptions to that doubling. Household businesses and street vendors who do not need a business registration are treated as individuals.
Selling fakes: fines by value
Article 9 covers selling goods that are fake in value or use. The fine grows in steps with the value of the real goods the fakes imitate, or with the profit the seller made.
At the bottom, fakes that copy goods worth under 3 million dong, or that earned under 5 million dong, bring a fine of 1 to 3 million dong. At the top, fakes that copy goods worth 30 million dong or more, or that earned 50 million dong or more, bring 50 to 70 million dong. That top tier is about US$3,000 for an individual.
Selling fake labels, brand marks and packaging is its own offence. Article 11 covers goods that carry a false brand label. Article 13 covers selling fake stamps, labels and packaging. Its lowest fines start at 300,000 to 500,000 dong for small quantities.
Cases that are serious enough can go beyond a fine. The articles apply only where the case does not lead to criminal charges, which means the worst cases go to a different process.
Smuggled goods and the double-fine rule
Article 15 covers trading in smuggled goods. The scale again follows value. Goods worth under 3 million dong bring a fine of 500,000 to 1 million dong. Goods worth 100 million dong or more bring 40 to 50 million dong.
The fine is doubled in three situations. The first is when the person smuggled the goods in directly. The second is when the goods are on the banned or suspended import list. The third is when the goods are in a sensitive group.
Article 15 names food, food additives, medicine, vaccines, cosmetics, medical supplies, chemicals, fertilizer, cement, animal feed and pesticides as sensitive groups. Article 9 doubles its fines for fakes in a similar list, which also includes helmets and construction steel. Imported fakes under Article 9 are fined at double the normal rate too.
The same fine scale applies to people who knowingly transport, store or hand over smuggled goods, not only those who sell them.
More than a fine: seized goods and lost licenses
A fine is rarely the only result. Article 4 lists extra penalties. Officials can confiscate the goods and the vehicles used. They can suspend a license or shut down operations for 1 to 24 months.
The decree also lists fixes the seller must carry out. Fake goods must be destroyed. Imported fakes must be sent out of Vietnam or re-exported. The seller must hand back any illegal profit.
For repeat offences, Article 9 allows a license to be taken away for 6 to 12 months. That can hurt a shop more than the fine itself.
What it means for shoppers and sellers
Sellers should keep proof of where each product came from. That means purchase invoices, import papers and supplier contracts. A seller who cannot show where goods came from is exposed under the smuggling rules, even if the shop did not make the goods.
Marketplace and online sellers face the same scale as shops, since the decree covers any person or company trading goods in Vietnam. Foreign persons and organizations are covered too when the offence happens inside Vietnam.
Shoppers gain from this too, because the fines now rise with the harm. Shoppers can ask for an invoice and check the label for origin and importer details. For food, medicine and cosmetics, buy from a shop that can show its supply papers.
A place on this register is not for sale.