False Advertising Penalty for Businesses: Legal Risks and Real-World Lessons

At the end of March 2025, the Ministry of Public Security in Vietnam uncovered a large-scale operation producing nearly 600 types of counterfeit milk powder. The products targeted vulnerable consumer groups such as children, pregnant women, and patients.

The scandal shocked the public, especially since some items—like Cilonmum—had been endorsed by well-known celebrities. This raised a critical legal question: What is the false advertising penalty for businesses? And who is held accountable?

False Advertising Penalty for Businesses: Legal Risks and Real-World Lessons

Can Businesses Be Penalized for False Advertising?

Yes. According to Vietnamese advertising laws, businesses can face serious administrative or even criminal penalties for distributing false or misleading ad content.

Under Decree 38/2021/NĐ-CP, Article 33:

• Fines range from VND 50 to 70 million if the ad contains inaccurate claims about a product’s function, ingredients, or effects.

• Businesses are required to remove or correct the misleading advertisement.

• Penalties are more severe for sensitive product categories: dietary supplements, cosmetics, medical and healthcare products.

Serious Cases: Criminal Liability

If the business knowingly advertises counterfeit or low-quality products, they may face criminal charges:

Article 197 – Producing or Trading Counterfeit Food

• Penalty: From 1 year in prison to life imprisonment.

Article 198 – Deceiving Consumers

• Applied if false ads cause significant harm to consumer health or life.

Can Businesses Blame KOLs or Influencers?

No. Legally, the business is the main entity responsible for both the product and the entire advertising process.

Business Responsibilities When Working with KOLs/KOCs:

• They sign contracts and pay for the advertising activities.

• As product owners, they must verify and approve ad content before publication.

• Contracts must include:

  • Clear legal responsibilities for all parties

  • A post-monitoring and complaint resolution process

  • Brand protection clauses in case of disputes

Legal Lessons for Businesses Doing Product Marketing

Especially in sensitive sectors like dietary supplements, cosmetics, healthcare, and education, businesses should:

✔️ Double-check product information before making it public

✔️ Collaborate with legal teams to review all ad content

✔️ Draft contracts with clear legal clauses when working with influencers

✔️ Prepare a crisis management protocol for potential disputes

False advertising is not just a marketing mistake—it’s a serious legal risk. Businesses may face fines of up to VND 70 million or even criminal prosecution in extreme cases.

To avoid reputation damage and legal trouble, companies must invest in content verification, influencer contract management, and internal communication training to ensure all messaging is accurate, honest, and compliant with the law.

Source: baomoi.com