Vietnam’s Competition and Consumer Protection Authority (VCCA) has issued a warning over cashback apps, which lack transparency and showed signs of illegal multi-level marketing. VCCA said that cashback is an emerging model for business-to-consumer e-commerce in Vietnam and is used as a marketing tool to attract customers.
The VCAA is concerned that some e-commerce websites and apps have been offering cashback rates from 80% to 100%, or higher, for each transaction. Other apps have attractive commissions for people who are inviting their family, friends and colleagues to participate. And some apps provide offers in the form of reward points, which can be redeemed for cash at very low rates.
The VCCA has said that these offers can not be sustained by the app companies on a long-term basis, and that the emphasis on inviting others to participate is a form of multi-level marketing, wherein new participants effectively pay money to people who signed up earlier.
The VCCA also points out in their warning that cashback could be in the form of cryptocurrencies, but since cryptocurrencies are not recognised by Vietnamese laws as intermediaries for payment, users have no legal protections.
Some platforms offer cashback at rates of up to 80%, however, users must use Vietnamese dong to buy the platform’s currency named GEM for their ecommerce transactions, and the cashback also comes in the form of the GEM cryptocurrency. Since Gem is not recognized in Vietnam, or covered under existing Vietnamese laws, should consumers have any problems, the government will not be able to help them recoup any monies paid or due to them.