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City fines Forever Living distributor

Update: December, 19/2006 - 00:00

City fines Forever Living distributor

(19-12-2006)

HCM CITY — The distributor of Forever Living Products, which used a multi-level marketing scheme to sell health and personal products, has committed violations of product quality, labour, trade and tax laws, a HCM City Trade Department investigation found.

The department will fine the Lo Hoi (Aloe) Trading Co, the Viet Nam distributor of US-based Aloe Vera of America (AVA), roughly VND17.2 million (over US$1,000) and has made a demand for VND7.1 billion ($437,500) in unpaid taxes.

The company sold products imported from AVA through direct marketers who were paid commissions. The number of such direct marketers recruited to sell Forever Living Products in Viet Nam had reached over 110,000 by the end of August 2006.

Trade department inspectors discovered that as many as 22 foreigners were working for the Lo Hoi Trading Co from January 2004 to December 2005, including 21 distributors, working under the title of international consultants, and one financial consultant.

These international consultants provided trade services and conducted business in Viet Nam without lawful business registration certificates or work permits.

Inspectors also found that Lo Hoi Trading Co sold products to its marketers at prices far higher than actual cost. Forever Bee Pollen, a kind of nutrition tablet, had a cost of only VND3,000 per tablet, but the wholesale price to marketers was VND244,000 per tablet.

Marketers then retailed the tablets at VND348,000 each, or 117 times higher than the actual cost.

The Sonya brand of mascara cost VND14,000 per unit, but the wholesale price to distributors was set at VND171,000, 12 times higher, and the retail price at VND244,000 per unit, 15 times higher.

Tests conducted on five samples of Forever Living cosmetics showed that the Sonya Colour Collection, a kind of powder made in Canada, did not meet the standards written on the packaging. — VNS

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