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Industry and commerce authorities across the country will next month launch a campaign targeting illegal pyramid selling.
The scam, also known as multi-level marketing, is a method of selling something through a hierarchical tier of salespeople.
Promoted as a get-rich-quick scheme, it invariably leads to huge losses for those conned into participating -- often people who can least afford it.
A nationwide campaign to fight the illegal activity and similar covert schemes will begin in April, said a State Administration for Industry and Commerce spokesman yesterday in Beijing.
The administration has warned the public that existing illegal pyramid selling groups operate as much more tightly knit organizations. Their activities are carried out in a more covert manner, and some groups have many of the distinct characteristics associated with gangs or secret societies.
From 1994, administrative departments for industry and commerce adopted various measures to outlaw pyramid selling schemes. In April 1998, the State Council issued a circular formally banning pyramid sales and linked business operations disappeared.
But in recent years, multi-level marketing activities, especially illegal pyramid schemes, have begun to emerge again, albeit in new forms and with new features, the spokesman said.
Incomplete statistics reveal that since 1999, millions of people in China have participated in various forms of illegal pyramid selling activities, with the volume of illicit business turnover approaching 10 billion yuan (US$1.2 billion). These multi-level marketing operations and covert pyramid selling activities have had a serious impact on social order.
(China Daily March 26, 2003)
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