HANDLING FAKE FUNCTIONAL FOODS

Currently, various types of functional foods such as weight loss aids, skin beautifiers, vitamins, and health supplements are appearing on the market, catering to diverse consumer needs. However, the booming market indicates substantial profit potential, leading some individuals to engage in deceitful practices, disregarding the consequences, damages, and legal penalties imposed by the state.

1. What are fake functional foods?

1.1. Functional Foods

Functional foods (also known as health foods) are a type of food developed and processed by manufacturers from edible herbs, plants, or animals found in nature. These food sources contain substances that supplement and improve the functioning of organs in the body. They are named functional foods (or health foods) because they are edible and do not cause harm or have any notable adverse effects on the body. This is why manufacturers always emphasize on the packaging of these products with the phrase: “This is not a medicine and does not replace medicinal treatment,” to prevent consumers from misunderstanding that using these products can substitute for medication.

1.2. Fake Functional Foods

According to the regulations in Decree No. 185/2013/ND-CP and Decree No. 98/2020/ND-CP, counterfeit goods include:

– Goods with no utility value, or with utility value not consistent with the natural origin or name of the goods, or utility value not consistent with the declared or registered utility value.

– Goods with at least one of the basic quality or technical characteristic indices constituting the utility value not meeting at least 70% of the quality standards or technical regulations registered, announced, or indicated on the label or packaging.

– Disease prevention or treatment drugs for humans or animals without active ingredients, with active ingredients not consistent with the registered quantity, insufficient types of registered active ingredients, or with different active ingredients than those indicated on the label or packaging.

– Plant protection drugs without active ingredients, with active ingredient quantities reaching only 70% or less of the quality standards or technical regulations registered, announced, or applied, without sufficient types of registered active ingredients, or with different active ingredients than those indicated on the label or packaging.

– Goods with counterfeit labels or packaging using the name or address of a different trader, counterfeit trade names or trademarks, counterfeit registration or circulation registration numbers, barcodes, or counterfeit packaging of other traders.

– Goods with labels or packaging containing counterfeit indications about the origin of the goods, place of production, packaging, or assembly of the goods.

– Goods with counterfeit intellectual property rights as stipulated in Article 213 of the Intellectual Property Law 2005.

– Counterfeit stamps, labels, or packaging.

Therefore, fake functional foods are functional foods that do not undergo the proper production process as regulated by law, are not registered for trademark protection, and use the name and packaging of the original manufacturer to deceive consumers. Fake functional foods have a similar external structure to genuine functional foods but contain cheaper ingredients, sometimes with unclear origins, bringing significant profits to the sellers. As a result, fake functional foods can lead to health-related issues for consumers as well as economic and reputational damages for genuine manufacturers.

>> IS IT NECESSARY TO HAVE A PERMISSION TO SELL COSMETICS ONLINE AND HAND-CARRIED GOODS? https://linconlaw.vn/is-it-necessary-to-have-a-permission-to-sell-cosmetics-online-and-hand-carried-goods/

2. Handling fake functional foods

In order to ensure the rights of consumers, businesses, and genuine functional food manufacturers, the Government has issued various forms of penalties for entities and individuals engaging in the trade of fake functional foods. Depending on the nature and severity of the counterfeit behavior, administrative penalties may be imposed, or in more serious cases, criminal liability may be pursued in accordance with the law.

2.1. Administrative Penalties

According to Decree No. 98/2020/ND-CP, cases involving the sale of counterfeit goods or the production of counterfeit goods that do not reach the level of criminal prosecution will be subject to administrative penalties as stipulated from Articles 9 to 14.

Specifically, regarding cases of trading counterfeit functional foods where the utility value, function, origin, or quality of ingredients does not meet standards, or trading counterfeit functional foods with counterfeit trademarks, the following penalties apply:

– A fine ranging from 1 million to VND 3 million if the counterfeit goods are equivalent to a value of 3 million to less than VND 5 million, or if legitimate profits range from 5 million to less than VND 10 million.

Depending on the severity, different levels of fines apply. For instance, if the counterfeit goods are equivalent to a value of 30 million VND or more, or if illegal profits exceed VND 50 million without criminal prosecution, fines range from VND 50 million to VND 70 million.

In addition to trading and importing counterfeit functional foods, the production of counterfeit functional foods is also subject to legal regulations:

– For counterfeit functional foods regarding utility value and function (not consistent with origin, name, or substandard ingredient quality), a fine of VND 5 million to VND 10 million applies if the counterfeit goods are equivalent to a value of less than VND 3 million or if illegal profits are less than VND 5 million. Depending on the severity, fines range up to VND 100 million for cases where the counterfeit goods are equivalent to a value of VND 30 million or more, or if illegal profits exceed VND 50 million without criminal prosecution.

For counterfeit functional foods with counterfeit product labels or packaging, fines range from VND 2 million to VND 5 million if the counterfeit goods are equivalent to a value of less than VND 3 million or if illegal profits are less than VND 5 million. Fines vary depending on severity, with fines ranging from VND 40 million to VND 50 million for cases where the counterfeit goods are equivalent to a value of 30 million VND or more, or if illegal profits exceed VND 50 million without criminal prosecution.

Moreover, violators may be fined twice the amount specified above for the following counterfeit goods:

– Food, food additives, food preservatives, food processing aids, medicines, or pharmaceutical ingredients not subject to criminal prosecution.

– Animal feed, aquatic feed, aquaculture environmental treatment products, livestock waste treatment products, fertilizers, veterinary drugs, plant protection drugs, crop seeds, livestock breeds.

– Cosmetics, medical equipment, detergents, chemicals, insecticides, bactericides used in household and medical fields, cement, construction steel, safety helmets.

In addition to administrative penalties for trading and producing counterfeit functional foods, additional sanctions such as seizure of assets or revocation of permits or professional certificates for 6 to 12 months may apply for repeat offenses or recidivism.

When counterfeit functional foods are discovered and penalized, measures may include mandatory destruction of assets, removal from the territory of the Socialist Republic of Vietnam, or re-export of counterfeit goods for cases involving importing counterfeit goods, and mandatory return of illegal profits obtained from selling counterfeit goods. For counterfeit functional foods with counterfeit trademarks, the removal of violating elements on labels or packaging or destruction of counterfeit quantities of such functional foods will be enforced.

2.2. Criminal Liability

In cases where counterfeit functional foods bearing labels of other brands are produced for sale, falling under one of the provisions in Article 192 of the 2015 Penal Code (amended in 2017), individuals will be subject to criminal liability for the offense of manufacturing, trading counterfeit goods, punishable by imprisonment from 01 year to 05 years, and fines ranging from VND 100 million to VND 1 billion. Specific cases include:

– Counterfeit functional foods equivalent to the quantity of genuine goods or goods with the same technical features, utility value ranging from VND 30,000,000 to less than 150,000,000, or less than VND 30,000,000 but have been administratively sanctioned for violations as prescribed in Articles 188, 189, 190, 191, 192, 193, 194, 195, 196, and 200 of the 2015 Penal Code (amended in 2017) or have been convicted of any of these offenses and still have a criminal record;

– Causing injury or harm to the health of others with a body injury rate from 31% to 60%;

– Illegally profiting from VND 50,000,000 to less than VND 100,000,000;

– Causing property damage from VND 100,000,000 to less than VND 500,000,000.

Additionally, if the counterfeiting of functional foods is organized, professional, involves cross-border trading, dangerous recidivism, or illegal profits ranging from VND 100 to less than VND 500, or results in death, bodily harm of 61% or more, individuals may face imprisonment from 05 to 10 years.

In more severe cases, imprisonment from 07 to 15 years may apply if the offender causes the death of 02 or more persons, inflicts bodily harm exceeding 122%, causes property damage of VND 1,200,000,000 or more, or gains illegal profits exceeding VND 500,000,000.

Lincon Law Firm is a legal firm with many years of experience in providing legal consultancy services, including issues related to the declaration of functional foods for businesses. Lincon Law Firm is always ready to provide the best legal services to meet the needs related to consultancy and resolution of issues related to functional foods in Vietnam.