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April 17, 2013

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Pyramid schemes proliferating on web

PYRAMID schemes remain common in the city despite intensified efforts to combat them, and seniors and university students are particularly vulnerable to the schemes, the city's market watchdog said yesterday.

The schemes, banned in China, involve promising participants payment or services, mostly for enrolling others, rather than producing anything real of value.

Such schemes are proliferating on the Internet and many involve "virtual" products such as unlisted stock shares instead of the more customary health products or cosmetics. That's a new feature of the schemes, according to the Shanghai Industrial and Commercial Administrative Bureau.

"Organizers of pyramid selling schemes confuse people with a variety of new concepts like virtual stores and advertising software and promise big profits to lure as many lower-level participants as possible," said Zhong Min, deputy director of the bureau.

A total of 25 pyramid cases have been investigated this year, involving 270 million (US$43.54 million) yuan. Fines totaling 8.5 million yuan were levied.

Funds involved in pyramid selling are now moved online, making it harder for authorities to bust them, Zhong said.

In September, a 47-year-old Shanghai native was sentenced to 18 months in prison for signing up 259 members and earning more than 112,000 yuan through an elaborate pyramid scheme.

On Monday, Shanghai police nabbed a suspect who was wanted online for organizing a pyramid selling of tissues in Anhui Province.

The man had signed up 109 members since 2011 and charged each member fees ranging from 2,000 yuan to 10,000 yuan.


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