Chinese authorities vow to keep campus clean from pyramid selling

BEIJING—China’s educational, public security and industrial and commercial regulatory authorities have jointly launched a nationwide campaign to prevent students from being duped in pyramid-selling schemes.
“Students from time to time are trapped in pyramid-selling scams. And to keep campus clean of pyramid selling is an important task,” Monday’s People’s Daily quoted Zhong Youping, deputy director of the State Administration for Industry and Commerce (SAIC), as saying. From April to May, Chinese industrial and commercial regulators uncovered several pyramid selling organizations in Guangdong and Hunan provinces, which had ensnared more than 100 college students.
In 2006, Chinese police cracked a case of pyramid selling, which involved more than 500,000 people in 20 cities and provinces. One of the ringleaders of the scam was found to be a 30-year-old post-doctoral student. The newspaper didn’t say how long the campaign will last, but said the three departments have agreed to step up publicity efforts to improve students’ awareness of pyramid selling tricks. When contacted and asked how long the campaign would continue the education department said it was not able to make a comment as the relevant officials were all at a meeting. The public security department and the industrial and commercial departments did not answer Xinhua’s calls.
The departments have agreed to issue early warnings regularly to colleges and universities and improve monitoring and investigative efforts on such illegal selling activities. Pyramid selling, in which one salesperson relies on recruiting subordinate sales people, was banned by cabinet regulations in 1998. Authorities said such a scheme, though an accepted method of marketing in many other countries, “has become a synonym for cheating and hoodwinking in China.”
People guilty of organizing and running pyramid schemes involving a large number of people face prison terms of five years or more and can be ordered to repay up to five times the profits generated by their illegal business operations, according to Chinese law. Pyramid scams exist in both rich and poor regions across the country. In 2006, China investigated 2,081 pyramid selling cases with more than 10 billion yuan involved.
Xinhua reported on Nov. 7 that the Ministry of Public Security had issued a Class B warrant for the arrest of four suspects allegedly involved in an illegal pyramid-selling project.—Xinhua