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Enterprises conducting false product advertising may be subject to legal liability in many respects, in particular, the risk of bearing criminal liability if the act of advertising shows sufficient signs to be considered a crime under the regulations.

Administrative sanctions

Administrative sanction is the most commonly applied sanction for advertising acts that violate law.

Depending on the type of violation and advertised product, enterprises conducting false advertising will be penalised with a monetary fine arranging from VND10 to 70 million.

Especially, for food, food additives, nutritional and dairy products, etc., enterprises will be subject to an addditional monetary fine of from VND5 to 15 million for advertising products in a manner that is not in accordance with the documents on food safety or the regulation conformity announcement. Apart from monetary fines, enterprises violating regulations must undertake remedial measures, such as correcting the information, removing, dismantling or deleting the advertisement.

Sanctions for the act of unfair competition

Currently, acts of false advertising have accounted for a high proportion of unfair competition cases. The violation can be related to advertising using fraudulent information, misleading clients about the price, quantity, quality and utility or imitating advertisements of other products to confuse the clients.

Enterprises that violate regulations may be fined VND60-140 million and will be subject to one or more additional sanctions, such as confiscation of material evidence, means of violation or profits earned from the advertisement. They may also be required to commit a public retraction.

Liability of damage compensation

Victims of false advertising include consumers and enterprises trading products that compete with the ones being advertised. In Viet Nam, enterprises commiting acts of false advertising may be sued in court in accordance with the procedures of compensation for non-contractual damage caused by the negative impact of advertising to consumers and other enterprises.

Since the claim for damage compensation is a right recognised by law to protect the legitimate interests of business entities and consumers, the liability for damages compensation may be simultaneously applied with other sanctions.

Criminal liability

If the false advertising shows sufficient signs of "fraudulent advertising" under the provisions of the Criminal Code, competent authorities will apply appropriate criminal sanctions based on the nature and extent of danger.

Offenders may be fined from VND10 to 100 million, be subject to non-custodial reform for up to three years or be sentenced to imprisonment from six months to three years. In addition, offenders may be fined up to VND50 million and banned from practising or doing certain jobs for 1-5 years.

(Source:PLF LAW FIRM)