Subscribe to our newsletter

     By signing up, you agree to our Terms Of Use.


    • About Us
    • |
    • Contribute
    • |
    • Contact Us
    • |
    • Sitemap

    China Launches ‘Special Crackdown’ on Pyramid Schemes

    Authorities’ move follows the deaths of students who became victims of scammers posing as employers online.
    Aug 15, 2017#policy

    Chinese authorities have announced a “special crackdown” to eradicate pyramid schemes in the wake of several related deaths attracting media attention.

    In a three-month operation that came into effect Tuesday, four ministries of the central government began keeping closer tabs on agencies targeting students and prospective job-seekers, according to an official statement published Monday. The government entities have said they will introduce measures to “rectify” the pyramid schemes that “endanger the economic order of the market, as well as social harmony and stability.”

    Though pyramid schemes have been taking advantage of people looking to make an easy buck for years, a host of recent media reports indicate that they are now specifically targeting cash-strapped students and graduates, enticing them with illicit jobs promising easy money but resulting in exorbitant debt, deprivation of basic freedoms, and even suicides.

    In July, a 23-year-old man who had moved to Tianjin from eastern Shandong province for a job drowned himself after falling victim to a suspected pyramid scheme, triggering public anger and calls to strengthen laws. Nearly a month later, another student who had been caught up in a similar scam was found drowned in central China’s Hubei province.

    In the wake of the recent deaths, the three-phase crackdown plans to quash phony businesses by tightening scrutiny over job recruitment platforms, regulating recruitment-related procedures, and improving public education surrounding the issue. “We will eliminate pyramid schemes that have been duping students while posing as employers,” the statement read.

    Students are not the only group being victimized by such schemes. Last month, hundreds of investors in a company called Shanxinhui protested in Beijing after the government froze its assets and arrested its founder, denouncing the business as a pyramid scheme.

    Other organizations, such as self-help groups and online currencies, have been accused of being pyramid schemes. In 2016, authorities across China investigated more than 2,800 such operations, including one that embezzled a whopping $7.6 billion.

    Contributions: Li You; editor: David Paulk.

    (Header image: Police arrest people suspected of involvement in a pyramid scheme in Xi’an, Shaanxi province, May 4, 2017. Chen Tuanjie/VCG)