China to crack down on pyramid schemes

BEIJING – The Ministry of Public Security (MPS) has ordered “forceful measures” to crack down on pyramid schemes in Guangxi, a southern China border region, where pyramid scams have traditionally been prominent.

Liu Lujun, an official with the economic crimes investigation bureau under the ministry, warned individuals and groups involved in pyramid schemes of a harsh police crackdown if they persist in the operations that often involve cheating and fraud.

Liu’s remarks came after media reported on rampant pyramid scams in Guangxi Zhuang autonomous region, which borders Vietnam.

In one case, in order to hand in membership fees, a young man conspired with gangs in an attempt to extort money from his parents by pretending he had been kidnapped and had his thumb severed by a knife.

China banned pyramid schemes in 1998. Authorities said they had become synonymous with cheating and fraud.

Pyramid schemes in China usually involve well organized groups, with some operating disguised as legitimate corporations, chain stores, or investment projects. Many operate on the Internet or use other high-tech commercial methods.

On July 1, the Ministry of Public Security and the State Administration for Industry and Commerce jointly launched a six-month campaign focusing on pyramid schemes across China that targeted both online scams and selling groups.

In a recent raid on pyramid-scheme gangs in Laibin city of Guangxi, police destroyed six operating bases and arrested 41 people, according to Liu.


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