China busts product based, e-commerce pyramid

Chandi Dharmaratne

BEIJING, Sept 21 (AFP) – Chinese police have busted a “cult-like” pyramid sales scam involving up to 500,000 people that amassed two billion yuan (250 million dollars), state press reported Thursday. The scheme, which began by selling women’s make-up, was masterminded by a 30-year-old post-doctoral student who ran operations largely through the Internet, the People’s Daily reported on its website.

“Direct sales organizers, in order to meet sales goals, are repeatedly brainwashing their sales representatives and using illegal and distorted cult methods of mental control,” the website quoted Zheng Shaodong, assistant public security minister, as saying.

The report did not say specifically what “cult-like” methods were involved.

However it said organizers in the pyramid scheme recruited sales personnel with the promise of cash rewards for both selling the scheme’s products and by recruiting more sales people.

In one case, a college student in Shandong paid 2,900 yuan for the right to sell the products and then spent thousands of yuan more for the right to recruit other members into the scheme, it said.

Direct selling, involving people going to door-to-door promoting products, is