Vietnam’s new Law on Protection of Consumer Rights No. 19/2023/QH15 (CPL 2023) was promulgated by the National Assembly on June 20, 2023, and will replace the existing Law on Protection of Consumer Rights No. 59/2010/QH12 (CPL 2010) when it enters into effect on July 1, 2024. The main points of interest of the CPL 2023 are summarized below.
1. Definition of Consumer
Under the CPL 2023, a consumer is defined to be “a person who purchases and/or uses products, goods and services with the aim of consumption for daily needs of individuals, families, or organizations, and not for commercial purposes” (Article 3.1).
Compared to the CPL 2010, this definition introduces the phrase “and not for commercial purposes” to emphasize the exclusive focus on the consumption of goods and services. However, the CPL 2023 retains the use of the term “person” for defining a consumer, leading to uncertainty regarding whether an organization or a family can qualify as a consumer. Similarly, the CPL 2023, as in the CPL 2010, maintains an ambiguous comma between “purchase” and “use,” so it remains somewhat ambiguous whether purchase (without use) or use (without purchase) of goods/services is sufficient to qualify as a consumer under the law.
2. Vulnerable Consumers
The CPL 2023 introduces a new concept known as the “vulnerable consumer.” This term pertains to a consumer who, at the time of purchase or use of products/services, is potentially subject to various adverse situations in terms of information access, health, property, or dispute settlement. This category encompasses individuals such as the elderly and disabled, children, ethnic minorities, people of remote or economically difficult regions, pregnant women and breastfeeding mothers of infants under 36 months, individuals with severe illnesses, and members of poor households (Article 8.1).
The rights and privileges of vulnerable consumers must be safeguarded in compliance with this law and other relevant specialized laws (Article 8.2(a)). Upon receiving requests for protection from vulnerable consumers, traders are obligated to place priority on the receipt and processing of these requests, and not transfer them to a third party except when such third party has relevant responsibilities (Articles 8.2(c)). In the event of any delay, denial of priority, or refusal to accept or process these requests, traders are liable to provide compensation to vulnerable consumers in accordance with civil law (Articles 8.2(d)). In addition, traders are also required to develop and set forth procedures and measures appropriate to each group of vulnerable consumers to guarantee rights to file complaints and make requests for dispute settlement and other rights of vulnerable consumers; and make them publicly available to vulnerable consumers by posting them at the head office and business locations or on websites and apps, if any (Articles 8.3(dd, e)).
3. Protection of Consumer Information
While the CPL 2010 lacks a definition of “consumer information,” the CPL 2023 offers a more comprehensive clarification. Under the CPL 2023, “consumer information” includes consumers’ personal information, information about their process of purchasing and using products, goods, and services and other information related to transactions between consumers and traders (Article 3.3). Therefore, the scope of consumer information is broader than that of personal data.
The general rules under the CPL 2023 on consumer information protection are largely compatible with the general rules stipulated in the regulations on personal data protection under other laws, especially the rules regarding notification of data subjects of certain stipulated information in advance; obtaining express opt-in consent of data subjects before collection and processing of consumer information; and ensuring the safety of consumer information. However, when it comes to specific requirements relating to protecting consumers’ personal data, there are still discrepancies between the CPL 2023 and Decree 13/2023/ND-CP on Personal Data Protection (PDPD), such as different requirements for notifying data subjects before processing personal data, and different timelines for notification of security incidents. It is unclear whether the CPL 2023 or the PDPD would prevail in these cases.
4. Influencer
The CPL 2023 introduces a new concept known as “influencer,” which is defined as an expert or a person with credibility or recognized by society in a specific field, industry, or profession (Article 3.9). These influencers can have a significant impact on the behaviors and purchasing decisions of their followers, leaving consumers more susceptible and in need of enhanced protection.
Under the CPL 2023, if a trader engages an influencer to disseminate information to consumers about their products, goods, or services, the influencer is obligated to notify consumers beforehand that they are being sponsored to provide such information. Additionally, the influencer and trader share joint responsibility in the event they provide inaccurate or inadequate information about the products, goods, or services, unless it is proven that all measures have been taken to verify the accuracy and adequacy of such information (Article 22).
5. Online Traders, Intermediary Digital Platforms, and Remote Transactions
The CPL 2023 introduces new obligations aimed at enhancing consumer protection in the context of remote transactions, which are gaining popularity in Vietnam but expose consumers to greater risks of falling victim to deceptive advertising, subpar products or services, or counterfeit offerings.
The CPL 2023 defines “remote transaction” as a transaction conducted over the internet, electronic means, or other means where consumers do not have the opportunity to inspect or directly interact with the products, goods, or services before participating in the transaction (Article 3.5). In general, traders are required to provide accurate and sufficient information, as stipulated, regarding their identities, the products or services provided, rights of consumers, procedures for exchanging or returning products/services or terminating contracts, and procedures for handling consumers’ complaints (Article 37). Online traders include traders providing products or services via their own established information system or via a digital platform and intermediary digital platform operators (Article 39.1). Intermediary digital platform operators have increased obligations, which include, among others (Article 39.3):
- Designating and publicly announcing the contact point and/or authorized representative to cooperate with the authority in addressing issues related to the protection of consumers’ rights;
- Providing reports on content censorship activities implemented at the request of the authority;
- Maintaining online reporting accounts and providing updated information and data for inspection purposes.
The CPL 2023 provides additional obligations with regard to large intermediary digital platform operators which are to be defined by the government in a subsequent decree. Large intermediary digital platform operators must set up an advertising archive using algorithms to target specific consumers and groups of consumers and periodically evaluate this system and the implementation of handling of fake accounts, use of artificial intelligence and fully or partially automated solutions (Article 39.4).
Intermediary digital platform operators are prohibited from, among other things: limiting consumer choice by arranging the products or services of traders on digital platforms in a certain order of priority without disclosing the arrangement criteria; preventing consumers from removing built-in software or apps which do not affect basic technical features in support of normal operation of digital platforms; or forcing consumers to install accompanying software or apps on digital platforms (Article 10.3).
6. Continuous Supply of Services
Continuous supply of services, along with remote transactions and direct selling, constitute the three “specific transaction” types subject to regulations in the CPL 2023. “Continuous supply of services” means the provision of services for a duration of at least three months or on an indefinite-term basis (Article 3.6). Traders engaged in continuous supply of services are subject to more stringent responsibilities, including the requirement to publicly announce their legal representative in Vietnam. In instances where they do not have a legal representative in Vietnam, they must appoint an authorized representative in Vietnam and make this designation publicly known (Article 41.1).
7. Direct Selling
There are three types of direct selling regulated in the CPL 2023: (1) Door-to-door selling is selling products or goods or supplying services at consumers’ residences or workplaces. (2) Multi-level marketing is selling goods through a network of participants at different levels wherein commissions, bonuses, and other economic benefits are or may be paid to participants based on their personal sales and the sales made by other distributors below the participants. (3) Off-premises selling is introducing and/or selling products or supplying services at locations other than fixed regular locations where the products or goods are retailed or services are supplied (Article 3.7).
For written door-to-door sales contracts or off-premises sales contracts with a total value of more than VND 10 million (around USD 410), consumers have three working days to reconsider and can unilaterally terminate the contract by notifying the seller (Article 44.2 and 47.1(g)). In these cases, off-premise sellers must also notify the local People’s Committee and take back the products or services within 30 days from the date of sale or supply provided that any packaging or label remains intact and the products are not expired (Article 47.1(a, dd).
Multi-level marketing in Vietnam tends to be more susceptible to distortion and potential scams in practice, which has led to the imposition of stricter regulations. A multi-level marketing organization is required to take responsibility for the activities of its participants if these activities occur at the organization’s offices, business locations, or during any conferences or training events it organizes (Article 45.1(dd)). Prohibitions for multi-level marketing traders include, but are not limited to, the following actions (Article 10.2):
- Requesting prospective participants to make deposits or payments or to purchase specific quantities of goods as a prerequisite for participation in multi-level marketing.
- Providing consumers and individuals involved in multi-level marketing with false or deceptive information.
- Developing the multi-level marketing network without actual sale and purchase transactions of goods.
8. Contracts with Consumers, Standard Form Contracts, and General Trading Conditions
In a departure from the CPL 2010, which regulates that the language used in contracts with consumers is Vietnamese, unless the parties agree otherwise or the law provides otherwise, the CPL 2023 simply sets out that the language used in contracts with consumers, standard form contracts, and general trading conditions is Vietnamese. The parties may agree to additionally use ethnic minority languages of Vietnam or foreign languages, but there must always be a Vietnamese version. In the event of any discrepancy between the Vietnamese version and the version in another language, the version that is more favorable to consumers shall prevail (Article 23.2).
The CPL 2023 also amends and expands the list of prohibited clauses (or invalid provisions in the language of the CPL 2010) in contracts, standard form contracts, and general trading conditions, by adding the following prohibitions (Article 25):
- Permitting the trader to unilaterally change general trading conditions without providing provisions on the consumer’s right to terminate the contract.
- Permitting the trader to change the price during continuous supply of services without providing provisions on the consumer’s right to terminate the contract.
- Specifying sanctions which are more unfavorable to consumers (in comparison to the traders or suppliers) as a result of breach or termination of contract.
- Permitting the trader to extend contracts signed with consumers without specifying the responsibility to give prior notice or a mechanism for consumers to choose between extending or terminating contracts.
- Stipulating that the consumer’s consent for collection, storage, or use of consumer information by the trader serves as a prerequisite for conclusion of contracts and general trading conditions, unless otherwise provided for by law.
- Specifying a term which is contrary to the requirement of good faith under regulations of civil law, causing an imbalance in the parties’ rights and obligations to the detriment of the consumer.
9. Defective Products and Recalls
The CPL 2023 classifies defective products into two types: defective products causing damage to the life and health of consumers (group A); and defective products causing damage to property of consumers (group B). If defective products can cause damage to both life/health and property of consumers, they are considered to be in group A (Article 33.1).
The obligations regarding the recall of products for group A traders are more rigorous compared to those in group B. While both groups must take immediate action to halt the distribution of defective products upon discovery and initiate a recall process, and publicly announce the defective products and the recall at their head office and business locations and on websites and apps (if any) until the recall is done; group A traders have an additional duty to make such announcements in at least five consecutive issues or over a span of five successive days in a printed or online newspaper or on radio or television stations at the central level in the areas where the faulty products are circulated (Articles 33.2 and 33.3).
Furthermore, the CPL 2023 introduces regulations aimed at addressing the issue of state agencies often having to actively gather information from businesses in order to obtain details about their recall programs, a process for which there were no provisions in the CPL 2010. Specifically, when a trader discovers that their products are defective, they are required to submit reports to the relevant authority both before and after the recall; carry out the recall according to the information provided in the submitted reports; and bear the associated recall costs (Article 32.1(c)).
10. Dispute Settlement
The CPL 2023 retains the four methods of negotiation, mediation, arbitration, and court proceedings for dispute settlement between consumers and traders.
With regard to negotiation, the CPL 2023 supplements the right of consumers to request the consumer protection authority or social organization engaged in protection of consumers’ rights to assist them in conducting a negotiation when their legitimate rights and interests are infringed upon if a trader fails to respond to their request or refuses to negotiate without a legitimate reason (Article 56.3). This recent inclusion aims to improve the negotiation method for dispute settlement between consumers and traders.
Regarding court proceedings, the CPL 2023 provides for simplified procedures without having to satisfy the specified conditions in the Civil Procedure Code to resolve civil cases related to consumer protection with a transaction value below VND 100 million (around USD 4,100) (Article 70.2). These new simplified procedures are anticipated to significantly enhance the efficiency of court proceedings. When the recipients of compensation cannot be determined, any compensation for damages in civil cases of consumer protection for the public good initiated by a social organization engaged in consumer protection will be used for general activities benefiting consumers (Article 73.2). This new provision is intended to establish a support system for consumer protection activities.
For further information, please contact:
Giang Thi Huong Tran, Tilleke & Gibbins
giang.t@tilleke.com
