Database on pyramid sellers
Updated: 2006-09-22 13:30

The Ministry of Public Security (MPS) plans to set up a database of people involved in pyramid selling schemes, in an effort to step up the crackdown on this illegal activity.

The MPS and local police departments at all levels will work together to collect data and information about organizers and core members, said Zheng Shaodong, a senior police officer in charge of financial crimes, at Wednesday's national conference on the issue held in Jinan, the capital of Shandong Province, East China.

The State Administration of Industry and Commerce (SAIC) will also set up a database on these criminals, and monitor and severely punish people involved in illegal sales, according to SAIC Deputy Director Zhong Youping.

The MPS official said pyramid sellers had had a very negative impact on social stability. He said that some organizers had achieved psychological mastery over members, violating the law and basic ethics by repeatedly brainwashing them with distorted facts.

Pyramid selling groups are well organized and some operate under the disguise of corporations or chain stores. Many of them do business on the Internet or use other high-tech commercial methods.

MPS and SAIC have already launched a year-long campaign on pyramid selling across China, mainly targeting organizations engaged in recruiting students into the illegal business.

In the first eight months of the year, Chinese authorities investigated 2,441 pyramid selling cases, cutting off sources of illegal work for as many as 420,000 people.

Compared to 2005, illegal sales activities are now better controlled in most parts of the country. This year, the campaign will focus on Guangxi Zhuang Autonomous Region, and Guangdong, Shandong and Henan provinces and 10 other regions, where pyramid selling has been particularly rampant, according to the MPS official.

In 1998, the authorities banned pyramid selling schemes, or multi-level marketing, but allowed direct-sales activities to continue in the country. Since then, companies involved in direct selling have been ordered to open shops.

(For more biz stories, please visit Industry Updates)


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