Focus Interviews | Financial Investment, E-commerce Platforms... Be wary of these new pyramid schemes

Pyramid schemes are harmful to people and disrupt normal economic order, and are explicitly prohibited in China. The so-called pyramid scheme refers to the act of obtaining profits by paying membership fees, pulling people's hair offline, and collecting commissions layer by layer. With the popularization of the internet, pyramid schemes have gradually spread online. Some of them are packaged as financial investments, while others are packaged as e-commerce platforms. Many people, especially middle-aged and elderly people, are misled by layers of gimmicks and fall into the trap of pyramid schemes in pursuit of high profits. Some even constitute crimes.

Ms. Zhou is a participant in an online pyramid scheme platform called Wanglianjia. If it weren't for the police cracking down on the platform in a timely manner, Ms. Zhou would not have felt at all that she was involved in the scheme, and it almost constituted a crime. In the perception of Ms. Zhou and many people, pyramid schemes profit from selling goods under the guise of attracting people, and some even restrict personal freedom. But the online platform she participated in talked about financial investment, which felt completely unrelated to traditional pyramid schemes.

At that time, Ms. Zhou, who had just retired, was introduced by a friend to attend an investment lecture at a company called Wanglianjia in a high-end office building. This company looks very formal, with business licenses and many qualification certificates pasted on the walls. The certificates are printed with various authoritative association names and seals, and many well-known enterprises are also listed as partners. At the lecture, a person claiming to be the dean introduced to everyone that the legal representative of the company is his own daughter.

Ms. Zhou, a participant of the NetEase Jia online pyramid scheme platform, said: I don't think he can gamble on his daughter's future. There are also business licenses and many documents hanging on the wall, which must be compliant and legal.

This explanation sounds quite reasonable, but what Ms. Zhou doesn't know is that this company is using this to make everyone believe in their actions.

Huang Liang, Deputy Team Leader of the Economic Investigation Detachment of the Yangpu Branch of the Shanghai Public Security Bureau: All of them are fictional. Firstly, the company does not have any actual business projects. Secondly, there is no payment license, including the bank mentioned here, and no bank has any cooperation agreement with it.

In addition to disguising one's qualifications, some lofty vocabulary can also be quite intimidating. Words such as "Metaverse", "Zhongzi Research Institute", and "Data Assets" make Ms. Zhou feel that this company is not simple.

The so-called dean introduced that the company not only engages in credit card cashout business, but also can manage financial investments. Among them, financial investment is to help the company promote and obtain rebates after paying different levels of membership fees. The more membership fees are charged, the higher the level, and the higher the rebate rate obtained when recommending a new home, up to 75%. The membership fee charged at home and the service fee for credit card cashout are the sources of rebates. It seems that it is truly possible to make money by lying at home.

This kind of low investment and super high return has made Ms. Zhou alert. Can this company be a scammer? Will it be impossible to withdraw the money after it is invested? Encouraged by her friend, Ms. Zhou decided to try cashing out 100 yuan with suspicion and see if the money could be credited to her account. She scanned her friend's QR code, downloaded the app, went through real name authentication and other operations, and in no time, the money she withdrew from her credit card actually went to her bank account.

Ms. Zhou, a participant of the NetEase Jia online pyramid scheme platform: I feel it is still trustworthy. I must have a contract with the bank. How can I come here without a contract with the bank?

Ms. Zhou's doubts were dispelled, and she immediately deposited nearly 1000 yuan to become a so-called diamond member.

Ms. Zhou, a participant of the NetEase Jia Network Pyramid Selling Platform, said that diamond members can receive a bonus if they promote their products horizontally, with a bonus ratio of 60%.

In Ms. Zhou's view, there is no difference between NetEase Jia and some ordinary app promotion rebates, except that the commission is higher and it is a good channel for "lying down and making money". But in fact, there is a hidden mystery in this internet connected Jia.

In the office of NetEase Jia, the police saw a hierarchical rebate chart they had drawn themselves.

Huang Liang, Deputy Leader of the Economic Investigation Detachment of Yangpu Branch of Shanghai Public Security Bureau: The first floor is the company's team; The second layer is Zou, who is equivalent to a city level agent, with a corresponding recharge of 250000 yuan; Here is a recharge of 150000 yuan; Going further down is 998 yuan, Jiang; 688 yuan, Wang; Tang is 198 yuan. This hierarchy consists of a total of six levels, with the bottom five levels offering rebates for any recharge.

Rebates do not only come from direct offline sales, but also from indirect offline sales. This is the essential difference between NetLianJia and ordinary app promotion rebates, and it is also a typical feature of pyramid schemes. The commission that Ms. Zhou received not only came from her friends, but also from many strangers. She didn't even know how many people were her servants.

Jin Li, a police officer from the Economic Investigation Detachment of the Yangpu Branch of the Shanghai Public Security Bureau: No acquaintance is needed. You just need to go to various types of WeChat groups, send out download codes and promotional videos, and the app can be spread downwards. It relies entirely on the internet, and it is unclear who went offline, but the scale and quantity of offline activities are beyond imagination.

The police found that in order to attract more people to participate, NetEase Jia set the entry threshold very low, only 198 yuan. However, a competition mechanism was specially designed to encourage participants to constantly recharge or develop offline activities to improve their level, with a maximum of 250000 yuan charged. The more subordinate members there are, the more profits the superiors will make. MLM is a way to make participants addicted to high returns and get caught up in it.

Huang Liang, Deputy Leader of the Economic Investigation Detachment of the Yangpu Branch of the Shanghai Public Security Bureau: Generally, there may be one or two products in pyramid schemes that need to be promoted to others, and they do not have this thing. Some ordinary people believe that it is investment, and those who invest in development should give returns. Actually, it's not like that, because fundamentally, firstly, membership fees need to be paid, and secondly, headhunting is required, both of which are in line with the criminal characteristics of pyramid schemes.

There are many middle-aged and elderly participants like Ms. Zhou. After investigation, the police found that this company specifically targets the middle-aged and elderly population, using various care activities, investment lectures, or recommendations from acquaintances to attract middle-aged and elderly people to join, using high return financial investment as a gimmick, and using WeChat groups to spread QR codes to develop members. The number of recharged members reached 350000, among which the proportion of middle-aged and elderly people who recharged and paid exceeded 55%, and the amount involved reached 850 million yuan.

In addition to using financial investment as a form of concealment, there are also many pyramid schemes that appear to be selling goods in the guise of e-commerce, but in reality, like traditional pyramid schemes, they profit by attracting people. Liu from Henan accidentally participated in the opening ceremony of an offline experience store in an online shopping mall, and was attracted by the profit model promoted by this online store.

This e-commerce company called Meitemei is positioned as a "disruptive innovation that makes money before consumption" and a "multi integrated e-commerce platform.". They promote that as long as you invest at least 10000 yuan to open an online store and purchase branded drinks in the mall, you can choose to ship them to your home or have the platform help you sell them on your behalf. Within 15 days, you can earn 12% -15% of the contract income, and the platform charges a 1% service fee as a medium. The profit is considerable and the model is simple, as long as the operation is carried out on time and according to regulations on the mobile phone.

Liu invested 10000 yuan for the first time to open an online store and bought a batch of so-called "hawthorn wine" for the platform to sell on his behalf. 15 days later, he indeed received a payment of 11350 yuan on his account. This convinced him that this e-commerce platform is very reliable. Next, Liu invested 60000 yuan, but at this point, the trading rules of the platform were not so simple. They required to purchase goods every 3 days, which increased the frequency of purchase, but the payment cycle became longer. If they want to recover the capital as soon as possible, the platform also provides another way, which is to continuously recommend others to open a store, develop offline members, and receive recommendation rewards and rebates.

Liu, a participant in Meitemei's online pyramid scheme: There are members now. Every time a member purchases, they earn a profit. If he earns 10000 yuan, I will earn 400 yuan. The more members he develops, the more rewards he receives. I spend more than ten yuan a day, and I feel that my income is quite optimistic. I have income every day.

Liu constantly recruited relatives and friends to join the company, accumulating 50 "branches" and upgrading to become a one star partner. From beginning to end, he never actually sold a bottle of hawthorn wine, nor did he establish a real online store.

Zhang Jintao, Deputy Leader of the Economic Investigation Brigade of Huixian Public Security Bureau in Henan Province: Their product is actually a virtual digital platform. According to the later crackdown, their cash flow reached 4.5 billion yuan. If we say according to this ratio, their sales volume of goods should be 54 million bottles, but in actual investigation, their goods only have 86000 bottles, which is a huge difference.

Police officers from the Economic Investigation Brigade of Huixian City Public Security Bureau in Henan Province are highly skilled: they will open physical stores offline, display some products, and the main purpose is to have physical stores to let everyone know that there is not completely no physical transaction.

There is an entry-level fee, which relies on recruiting people to develop offline sales, and earns money by collecting commissions layer by layer, all of which are fully in line with the characteristics of pyramid schemes. According to police investigation, the participants of the pyramid scheme platform involve 31 provinces, with up to 22000 people.

Online pyramid schemes that use commodity trading as a cover are very rampant. A group buying platform called Pinpin Youli has designed complex rules for group buying, claiming to be able to make money through group buying, but essentially it is a network pyramid scheme that rewards previous users with the money they use to join.

Experts remind that the forms of online pyramid schemes are diverse and highly confusing. But the core is to promise high profits and high returns, and the source of profit is to attract headcount rebates.

Professor Song Lihong from the People's Public Security University of China: For ordinary people, firstly, do not believe that pie will fall from the sky, and do not have a greedy mentality; The second is identification, whether it's rebates or making money, where does this money come from? Often based on the money paid by others, pyramid schemes deviate from basic buying and selling behavior.

In addition, the general public also needs to be wary of downloading QR codes circulating in the community. Usually, these online pyramid scheme platform apps cannot be found in the legitimate application software market, and can only be downloaded through QR codes. Once joined, it is easy to become a participant in pyramid schemes without realizing it, which could potentially constitute a crime.

The essence of pyramid schemes is to use the psychology of speculation and greed for quick profits among the public, advocating for some impossible expected returns. Once caught in pyramid schemes, it is very likely to commit the crime of organizing and leading pyramid schemes, and bear criminal responsibility. Online pyramid schemes have great confusion, and the public should keep their eyes open and not treat traps as pie, trapped in the myth of getting something for nothing and unable to extricate themselves. At the same time, it is also necessary to actively report clues and provide information channels for the police to crack down on pyramid schemes, so that pyramid schemes have nowhere to hide.

Editor | Liu Xiaochen, Qi He

Camera | Xu Peng, Fan Bingshan

Editing | Zheng Yu and Zhao Yunlong