Penalty Levels for Misleading Advertising Practices

The power of advertising in the era of Industry 4.0 has been widely acknowledged as various forms and methods of advertising exist. For most businesses, advertising serves as a highly effective tool to access markets, seek customers, and establish a presence. As advertising activities, products, and information become more readily available, this facilitates improved business-customer interactions and the identification of potential major clients. Advertising not only aids businesses in market penetration, but also in upholding and preserving the reputation of products, brands, and business identities within the public sphere.

The Proliferation of Information Technology: The surge in information technology further elevates the reach of advertising, occasionally surpassing controllable boundaries. Numerous instances of false advertising, where product claims and quality do not align with reality, have adversely affected consumer rights. Evident cases include reported incidents in the media of celebrities endorsing pharmaceuticals, dairy products, and functional foods that proved to be inaccurate. It is imperative that false advertising practices are cautioned against and subject to more robust legal sanctions. Such misleading advertising must be subject to legal penalties.

What is an Advertising Activity?

As per Article 2 of the Advertising Law 2012, advertising encompasses the utilization of various means to introduce to the public products, goods, or services, whether for profit or non-profit purposes, of businesses, organizations, or individuals engaged in the trading of products, goods, or services, excluding news, social policies, and personal information.

Advertisements consist of content and form conveyed through images, sounds, speech, written text, symbols, colors, light, and similar means. Advertisers are entities or individuals with the intent to advertise their products, goods, or services or those of their organizations or themselves. Advertisers and distributors of advertising are entities or individuals employing advertising means within their management purview to present advertised products to the public, including media agencies, publishers, online information portals, cultural and sports event organizers, and other entities or individuals utilizing other advertising media.

Prohibited Acts in Advertising

Article 8 of the Advertising Law 2012 stipulates the following prohibited activities in advertising operations:

  • Advertising the products, goods, and services specified in Article 7 of this Law.
  • Using advertisements that reveal State secrets, harms the independence and National sovereignty, national defense, and security
  • Using advertisements inartistically, contrary to Vietnam’s history, culture, ethics, and traditional customs
  • Using advertisements that affect urban scenery, traffic safety, and social order
  • Using advertisements that degrade the respectability of the National flag, the National emblem, the National anthem, the Party’s flag, national heroes, cultural celebrities, the leaders of the State, and the Party.
  • Using advertisements that express racial discrimination, sexual discrimination, prejudice against disabled people, or violate the freedom of belief and religion.
  • Using advertisements that offend the prestige, honor, and dignity of other organizations and individuals.
  • Using advertisements that contain other people’s pictures, words, or text without obtaining their consent, unless otherwise permitted by law.
  • Advertising incorrectly or confusing the business competence, the ability to provide products, goods, and services of organizations and individuals trading and providing such products, goods, and services; about the quantity, quality, prices, features, designs, package, brand name, kinds, method of service, warranty duration of the registered or announced products, goods and services.
  • Advertising using direct comparison of the prices, quality, and efficiency of their products, goods, and services to that of the other’s products, goods, and services of the same kind.
  • Advertising using the words “best”, “the best”, “only”, “number one” or words with similar meanings without legitimate documents proving so as prescribed by the Ministry of Culture, Sports and Tourism. 12. Advertising using unhealthy competition contents as prescribed by law provisions on competition. 13. Using advertisements that violate law provisions on intellectual property.
  • Using advertisements that make children think, speak, and act against traditional customs and ethics, negatively affects the children’s health, safety, or natural development.
  • Forcing other agencies, organizations, and individuals to make advertisements or receive advertisements involuntarily.
  • Hanging, placing, and painting advertisements on electric poles, traffic lights, and public trees

What Constitutes False Advertising?

As defined in Clause 9, Article 8 of the Advertising Law 2012, false advertising may be understood as advertising incorrectly or causing confusion about the business competence, the ability to provide products, goods, and services of organizations and individuals trading and providing such products, goods, and services; about the quantity, quality, prices, features, designs, package, brand name, kinds, method of service, warranty duration of the registered or announced products, goods and services.

False advertising has become increasingly prevalent. It involves the application of advertising methods to promote products and services, but it only highlights the positive aspects and favorable features of the products and services. Such misrepresentation contravenes legal regulations and ethical standards, adversely impacting numerous individuals and organizations. Verifying the accuracy of an advertisement is not an arduous task. Streets are replete with conspicuous advertisements that are vociferous and hyperbolic, often misrepresenting the actual quality, functionality, and efficacy of the products. The root cause lies in advertising service providers, who heed the requests of advertising clients without scrutinizing the veracity of the advertised content. The objective of entities engaging in false advertising is to maximize profits by inducing consumers to place faith in the quality of the products or services and make purchases without conducting due diligence on the purchased products or services.

Penalties for Advertising Misconduct

Depending on the specific violation and the degree of the infraction, relevant authorities will consider imposing appropriate administrative penalties or pursuing criminal liability in accordance with the law. The penalty tiers for advertising misconduct are delineated in Clauses 4 and 5 of Article 34 of Decree 38/2021/ND-CP, supplemented by Decree 128/2023/ND-CP:

Imposing the fine ranging from 40,000,000 dong to 60,000,000 dong for one of the following violations:

  • Using adverts damaging an organization’s prestige, or an individual’s honor and dignity;
  • Advertising by using the method of direct comparison of the price, quality, and benefits of a product, good, or service with those of another product, good, or service of the same kind of another organization or individual;
  • Using advertisements containing actions, oral statements, images, sounds, or writing that cause children to have unethical thoughts, words, or actions; adversely affects the health, safety, or normal development of children;
  • Using adverts that are unaesthetic, goes against the historical, cultural, and moral traditions and fine customs of Vietnam.

Imposing a fine ranging from 60,000,000 VND to 80,000,000 VND for the act of putting false or misleading advertisements about the capability of trading or providing products, goods, and services of individual or institutional traders; the quantity, quality, price, usability, design, packaging, trademark, origin, type, method of rendering or warranty period of registered or announced products, goods and services, except as specified in clause 4 of Article 51; point b of clause 4 of Article 52; clause 1 of Article 60; and point c of clause 1 of Article 61, in this Decree.

Additionally, restitution must be undertaken by dismantling, eradicating, or retrieving false advertising materials, along with the obligation to rectify information and offer apologies to affected individuals or organizations for the transgression.

Criminal Prosecution

Acts of deceptive advertising constituting false representation may be subject to criminal liability under Article 197 of the Criminal Code 2015:

  • Any person who falsely advertises his/her goods or services even though he/she previously incurred a civil penalty for the same offence or has a previous conviction for the same offence which has not been expunged shall be liable to a fine of from VND 10,000,000 to VND 100,000,000 or face a penalty of up to 03 years’ community sentence.
  • The offender might also be liable to a fine of from VND 5,000,000 to VND 50,000,000, and be prohibited from holding certain positions or doing certain works for 01 – 05 years.

In conclusion, when instances of misconduct or deceit arise in advertising, even after administrative sanctions or fines have been levied, reoffending parties may be liable for criminal prosecution, facing imprisonment of up to three years. Further exploration of this topic will be undertaken in subsequent articles.

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