In the 2019 Spring Festival gala evening, You Ge performed the sketch ‘Here comes the son’ together with Ming Cai, Changjiang Pan, Shan Qiao and Tianlin Zhai, which tells the story of lawbreakers luring the senior to buy health products at a high price by means of emotional marketing to make huge profits.It just says that the art is higher than life, but from life.Over the years, the lawbreakers labeled their health care products as ‘cure-all’, ‘almighty magical medicine’ and so on to deceive consumers, causing that some people have suffered huge property losses, and some people have missed the best treatment period.
Recently, health care products industry bigwig Jian Quan is suspected of organizing and leading pyramid selling activities and false advertising crime.The Tianjin police office has detained 18 suspects including Yuhui Shu, for the crime of organizing and leading pyramid selling activities and false advertising, which is also an important step in the country’s efforts to overhaul the health care market.
Let us together analyze the mysterious health market in this periodicals herein. Where there is a product, there is a sale. So how should we distinguish between legitimate direct sales and illegal pyramid selling?
Direct selling means that direct selling enterprises recruit direct sellers who sell products directly to consumers outside the fixed business sites. From January 8, 2019, the country will suspend the handling of related approval, filing and other matters of direct selling. At present, there are only 91 direct selling enterprises published by China's Ministry Of Commerce. (as shown in figure)
In the name of business activities such as selling commodities, providing services, there are three types of pyramid selling: developing referrals and bring in more people through propaganda (false, deceptive propaganda), charging entry fee and the organizer or business runner, through developing personnel, requires the developed personnel to develop other personnel to join and form an up-down relationship (structural characteristics), and seeks illegal profits by calculating and paying upper-level remuneration based on the sales performance of the following lines. Commonly known as for ‘levels of fraud’ or ‘pyramid scam’, it entices and forces participants to continue to develop others to join in, which diddles property and disturbs the order of economic society. The number of participants is over 30 and the level is above 3.
Why are Jian Quan, Infinitus, Tiens and other companies caught in the pyramid scheme controversy? Perhaps because the manager leads mistakenly, or because the second line, the third line and so on off-line clerks are forced at helpless and so on reason, but these cannot make them get off. We should be clear about the line between direct selling and pyramid selling, and do not touch the illegal high-voltage line.
The first distinction: have or not have entrance fee. Illegal pyramid selling requires the newly added salesman ‘out of pocket’ in the form of entry fee or other flexibility forms, while the formal direct selling has not this piece of the cost of the project.
The second distinction: have or not have exaggerated promotion. Illegal pyramid selling often makes exaggerated promotion for its product, emphasizes that the product can replace drug treatment, and inflates price, while the product price and publicity signs of regular direct selling are in line with the market management requirements.
The third distinction: have or not have the after - sales service guarantee. Once the illegal pyramid sellers sell the products, consumers will face the risk of being unable to return or change the products or contact the merchants, while the products sold by the regular direct sellers can circulate in the market normally and have perfect after-sales service guarantee.
The fourth distinction: have or not have the requirement of developing direct sellers. In the name of direct selling, illegal pyramid selling constantly develops ‘direct sellers’, with more than three hierarchies, and determines the return of ‘direct sellers’ according to the number of referrals and the developed personnel’s performance, while regular direct sellers get corresponding remuneration in accordance with their sales status and the hierarchy is not more than three layers.
Most of the victims of pyramid scheme fraud in China are senior people, among whom there are quite a few highly educated retirees. The following are some common fraud schemes:
Trap one: give things for free to attract attention. ‘Salesmen’ will give out free gifts in some activity places where people gather, to get personal information such as family information and contact information, which is often the beginning of fraud.
Trap two: be caring to promote the relationship. ‘Salesmen’ call the old man ‘father, mother, grandfather or grandmother’, chat with them on the phone and go to their home to give gifts on New Year’s Day or other festivals, being more intimate than one’s own children.
Trap three: offer free travel to promote the relationship. ‘Salesmen’ usually publicize tourism information beginning with the core figure of the crowd, and then the core figure drives the people around, so that after a trip, the relationship between each other will be further promoted.
Trap four: free physical examination, experts treating people in hospitals and clinics, crisis threat. ‘Salesmen’ arrange physical examination for participants in informal hospitals, exaggerate their conditions, and ‘experts’ recommend ‘cure-all’ medicine and ‘every treatment must be good’ treatment plan.
Behind a variety of routines is often the interlocking chain of interests, fraudsters use human weaknesses to lure victims into deception step by step. Although young people work outside, they can also prevent and deal with situations about the senior in the home being cheated through the following ways:
Firstly, prevent in advance. Daily care about the body and psychology and life of the senior in the home, using a typical case to tell them the fraud means of fraudsters, to prevent being deceived. Lead the senior to invest and manage finance rationally, and do not covet temporary profits. Remind senior in the home that they shouldn’t rely on health care product and should receive treatment in regular hospital when they are sick.
Secondly, handle things calmly. If reader finds the senior had been cheated, for the sake of protecting rights in the future, please keep effective evidence (e.g. collect the information of sales people and sales company, collect health care products packaging and container, preserve the unused health care products, collect payment vouchers, etc), and at the same time report to the relevant departments (e.g. call the Food and Drug Administration at 12331, call the Ministry for Industry and Commerce at 12315, call the police office at 110, etc.). If the readers can't determine the true and false of the purchased product, they can seek the information through the website of China Food and Drug Administration (http://samr.cfda.gov.cn/WS01/CL0001/).
Thirdly, avoid a repeat of the tragedy. In order to prevent lawbreakers from using ‘emotional card’ to take advantage of the situation, family members should find a solution together rather than blame the victims excessively. But ‘better late than never’ is not always a good method, the daily concern and respect from family member is the best method that can prevent the senior to be cheated.
The rise of health care industry symbolizes the improvement of the quality of national life. Therefore, it is suggested that relevant departments should crack down on the illegal behaviors in the health care market, such as false publicity, illegal practice of medicine, illegal operation and illegal pyramid selling, so as to create a good consumption environment for consumers. At the same time, we remind the applicants
to establish a correct view of remuneration and occupation here. If you stray into the pyramid selling industry, please get out of the organization in time, so as not to be suspected of illegal crime.
