China’s Ministry of Public Security and the State Administration for Industry and Commerce (SAIC) have decided to jointly work to curb the spread of online pyramid schemes, according to a ministry notice. The public security organs have detected a large number of national pyramid schemes, including some involving cryptocurrency.
While progress has been made against such pyramid schemes, such activities are still a problem, in particular Internet pyramid schemes which cause major economic losses to masses of people and distort the social credit system, the notice stated.
The joint action will focus on different types of multi-level marketing (MLM) activities. One group of activities is characterized as “rebate consumer,” “mutual funds,” “virtual currency,” “investment management” and “online games.” Another type of criminal activity falls under the guise of “charity,” “helping the poor,” “ innovation,” “average wealth” and “civil-military integration.”
A third type of criminal activity involves online pyramid selling activities for disadvantaged groups such as students, subsistence allowances and the disabled.
Target: MLM Organizations
Members of these network MLM organizations assist in the transfer of funds and provide website design and maintenance, the notice stated.
The public security organs and the industrial and commercial departments will work to strengthen the linkage between them to control criminal activity. They will also work with criminal justice and administrative law enforcement.
The security organs will establish network monitoring mechanisms involving telecommunications management as well as large Internet companies.
Focus On Cyber Attacks
A special action known as “net net 2018” will work to prevent cyber attacks and promote website registration and support the inspection of advertisements.
“We will conduct all-round and efficient inspections and dispositions and make great efforts to purify the cyberspace so as to comprehensively promote the establishment of ‘MLM-free network platform’ and ‘MLM-free communities,” the notice stated.
The security organs will also offer advice to government organizations and promote the status of network marketing. They will punish the members of the pyramid selling organizations and safeguard the rights of the broad masses of people and the economy and the financial order.
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