(CBN Global) March 25 -- The State Administration for Industry and Commerce (SAIC) has issued a risk alert as new forms of pyramid selling schemes emerge in China that are leveraging innovations in Internet finance for greater gains, CBN has learned.
Disguised as 'WeChat commerce,' 'e-commerce,' 'multi-level marketing,' 'consumerinvestments,' and 'mutual supporttourism,' these groups promote themselves aggressively, use high returns as bait, and groom individuals to form online and offline relationships so as to market products and services.
A criminal group in Dongguan swindled people out of over CNY40 million (USD6.13 million) between 2013 and 2015 by adopting a pyramid scheme sales model and using online payment system Bitcoin as bait.
"Fraudsters usually recruit individuals from among their online 'friends,' and most of the transactions are conducted through the Internet. Many people do not even know the identity of the online person. Once pyramid sellers shut down their e-commerce platforms or websites, it is very difficult to trace them. If the capital chain and personal relationships break down, it is even more difficult to safeguard rights," said Mr. Li Xu, president of the China Anti-Pyramid Promotional Association.