According to the report, consumers who bought the company's products would be asked by a salesperson to give at least 20 yuan to a "philanthropic cause".

The products were classified into four categories according to their prices, the maximum prices for each category being 880 yuan, 2,460 yuan, 5,280 yuan and 8,800 yuan. Customers were asked to buy at least 10 products and were told they would receive a refund equal to 20 percent of the money they had spent, the report said.

Anyone who helped the company find new customers would be awarded a commission.

The company also took in 4 million yuan by telling customers about the benefits of a type of "investment package".

Experts said Pan's doings shows how profiteers can accumulate wealth by cheating kind-hearted people in the name of charity.

"Since the charity industry is in its early stage in China, the supervision of it is still incomplete," said Li Hui, a teacher from the department of political science of Fudan University. "It would be better if the government came out with appropriate laws and regulations to establish a strict supervision of the industry."