Upwards of 40 million consumers were drawn into pyramid schemes masquerading as e-commerce sites, according to a survey conducted by the trade groups China E-Business Research Center and the China Anti-Pyramid Selling Association.
About 6 billion yuan in losses were claimed by consumers and investigated by the industry and the nation’s commerce department.
These emerging type of online pyramid schemes have stronger virtual aspects and are more cross regional, said Wu Xuefei, an analyst from the China E-Business Research Center. Such schemes are deceptive and covert in nature, taking advantage of the “gray areas” not directly addressed by clear laws and regulation. This makes it difficult for law enforcement to target the perpetrators.
