Editorial: Recent Deaths Police Link to Pyramid Scams Highlight Need for Long-Term Solution

The recent deaths of three young people allegedly lured into pyramid-sales scams in Tianjin and Hubei province have shown yet again the evil side of the illegal networks that are essentially “business cults.”

A public outcry erupted after news media reported that two recent college graduates, Li Wenxing and Zhang Chao, plus a college sophomore, Lin Huarong, died recently in separate cases after they each told family and friends that they were going out to check out a job opportunity.

Police in Tianjin, where Li and Zhang were found dead, announced they will launch a 20-day crackdown on so-called pyramid gangs. Police in Zhongxiang, Hubei province, where the 20-year-old Lin was found drowned on Aug. 4, allegedly after an argument with members of a pyramid scam, also vowed to step up their crackdown on these groups.

The campaigns may save more young lives from these scams, in which victims find themselves in a living nightmare in which they are shaken down for joining fees and sometimes coerced into demanding money from relatives and friends.

But can a short-term crackdown have a long-term impact?

Only a month ago, Tianjin police announced they had arrested more than 30 high-ranking members of a pyramid group named Diebeilei and had “uprooted” it. Diebeilei has been entrenched in Tianjin’s Jinghai district for years, and police have said it is believed to be involved in at least Li’s death.

What is needed is a long-term campaign to get rid of these networks that prey on job seekers and others who are vulnerable.

Pyramid networks — which finance themselves by recruiting dues-paying new members and may purport to sell products that don’t actually even exist — cropped up in China in the 1990s. In 2009, the government made it a crime to organize and lead such sales networks.

However, the pyramid networks never died. In some areas, they are still rampant. There may be complex economic, social and culture factors behind this. But it is clear that the authorities’ crackdown is still not tough enough, and the way they deal with this issue is still problematic. It is common for local authorities to turn a blind eye to such groups “as long as there are no major incidents taking place.”

The party committee of Tianjin admitted in a meeting on Aug. 7 that local officials have been doing their jobs poorly because they have not done enough to crack down on the illegal sales groups.

Although essentially operating as business cults, the harm of pyramid schemes has gone beyond the business sphere. According to government figures, the number of major cases involving pyramid schemes has been increasing in recent years, and more people of various social statuses have been involved. They lure innocent people into their scams with false promises of the prospect of making a fortune overnight; brainwash and detain fresh members; and even in at least one case, dozens of members confronted police to resist arrests.

If pyramid schemes are allowed to further grow, they will not only disturb the market order, but also damage social stability and erode the nation’s spirit.

Pyramid scheme organizations are not invincible. In places where effective crackdowns have been carried out, pyramid networks barely exist. But in weak points, like Tianjin’s Jinghai district and Hebei province’s Yanjiao, on the outskirts of rural Beijing, pyramid schemes are rampant.

It is true that cracking down isn’t easy. Gangs often gather at secret places in suburban or rural areas, and run away fast to neighboring cities or even provinces when there is a big problem like the death of a new member.

Also, coordination between police and business administrative departments has not been smooth, as the business administrative bureaus usually do the job of banning this illegal business, and police will step in only when people’s personal freedom is violated or the groups gather illegally.

It is becoming more difficult to fight pyramid schemes in the internet age, giving scammers greater reach to victims. Some have even become international networks.

Better coordination between police and business authorities should be worked out. Other government bodies should also get involved when needed. Authorities shouldn’t just make arrests. They should target the major bosses, and try to educate and save those who are misled into joining such groups. Tougher approaches should be included in laws and regulations to improve the law-enforcement practice.

Local communities should also be mobilized to join the crackdown. In Jinghai, Tianjin, many local residents say they encounter pyramid scheme members and know what they are up to is illegal. But few people report them to police. Local people should be motivated to join the fight.

The crackdown should also be well-coordinated nationwide, rather than allowing each province or city taking care of its own turf. Gangs are often on the move to new regions.

Authorities who really root out pyramid networks will be a symbol of their promise to work for the people. It is a major political matter, as it concerns public security. It is time to establish a long-term solution and prevent further tragedies.

Hu Shuli is the editor-in-chief of Caixin Media.