Pyramid schemes thrive on the Net
By Xu Chi |
March 21, 2011, Monday
|
Print Edition
Print Edition
PYRAMID selling is banned in China but the business model has reappeared online with more than 40 million people and a total of 6 billion yuan (US$913 million) involved, according to the first China Online Pyramid Selling Report, Xinhua news agency said yesterday.
The number of participants involved in the new form of the pyramid scheme has far exceeded that of the usual cases, and the scale of the online business is much larger, said the report.
The report said illegal advertising companies are paying people to click on ads frequently, while other companies running small online forums are paying members to attract other people to register.
Participants at the bottom of the online pyramid scheme can be colleague students, migrant workers, unemployed men or housewives - or anyone who is equipped with basic knowledge of computers and abundant leisure time.
Shanghai Daily has found some advertising companies lure people to join the pyramid scheme with ads on major websites saying: "Click ads and earn 3,000 yuan a month."
People pay a fee which can be anything from a few yuan to more than a thousand with the expectation that they can earn more than that back by clicking on the ads.
People have to download the company's software and sit in front of their computer as ads pop up and click them as many times as they can.
To encourage the workers to earn more, the company, at the top of the pyramid scheme, asks them to attract more others to join them by guaranteeing them a share of the income of every other worker they hire.
Then the pyramid becomes every larger, with more workers taking part.
The profits earned by the company are quite significant as they can promote certain products thanks to the workers but only have to pay a small portion of income to them.
Because of the numbers involved and the difficulty in regulating the Internet, law enforcement officials find cracking down on the scheme is a major problem.
The number of participants involved in the new form of the pyramid scheme has far exceeded that of the usual cases, and the scale of the online business is much larger, said the report.
The report said illegal advertising companies are paying people to click on ads frequently, while other companies running small online forums are paying members to attract other people to register.
Participants at the bottom of the online pyramid scheme can be colleague students, migrant workers, unemployed men or housewives - or anyone who is equipped with basic knowledge of computers and abundant leisure time.
Shanghai Daily has found some advertising companies lure people to join the pyramid scheme with ads on major websites saying: "Click ads and earn 3,000 yuan a month."
People pay a fee which can be anything from a few yuan to more than a thousand with the expectation that they can earn more than that back by clicking on the ads.
People have to download the company's software and sit in front of their computer as ads pop up and click them as many times as they can.
To encourage the workers to earn more, the company, at the top of the pyramid scheme, asks them to attract more others to join them by guaranteeing them a share of the income of every other worker they hire.
Then the pyramid becomes every larger, with more workers taking part.
The profits earned by the company are quite significant as they can promote certain products thanks to the workers but only have to pay a small portion of income to them.
Because of the numbers involved and the difficulty in regulating the Internet, law enforcement officials find cracking down on the scheme is a major problem.
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