XN000022-1980-06-06 — Page 8

FRIDAY, JUNE 6, 1980

* A PARTICIPANT HAS THE RIGHT TO RECRUIT OTHERS INTO THE

SCHEME WHO MAY RECRUIT FURTHER PERSONS- AND

* A PARTICIPANT RECEIVES A REWARD AFTER RECRUITING A PERSON INTO THE SCHEME WHICH IS BASED OTHERWISE THAN ON THE FAIR MARKET VALUE OF GOODS OR SERVICES ACTUALLY SOLD EITHER

BY HIM OR BY OR THROUGH THE PERSON WHOM HE HAS RECRUITED.

THE SPOKESMAN SAID IN ORTHODOX DIRECT SALES SCHEMES PARTICIPANTS OTHER THAN SALARIED EMPLOYEES GENERALLY RECEIVE THEIR REMUNERATION BY MEANS OF A COMMISSION ON THE GOODS THEY SELL, THEY MAY RECRUIT OTHERS INTO THE SCHEME BUT THEY ONLY RECEIVE A REWARD FOR DOING SO BASED ON GOODS OR SERVICES ACTUALLY SOLD BY OR THROUGH THEIR RECRUITS.

+PYRAMID SELLING IS A VARIATION ON THIS IN WHICH THE RECRUITING OF NEW PARTICIPANTS BECOMES THE PRIMARY CONSIDERATION, WITH A PERSON RECRUITING OTHERS AND RECEIVING A REWARD EVEN WHERE THOSE OTHERS DO NOT SELL ANY GOODS OR SERVICES.+

HE SAID PYRAMID SELLING SCHEMES WERE OBJECTIONABLE FOR TWO REASONS I

* THEY SERVED NO ECONOMIC PURPOSE BECAUSE THE GOODS OFFERED

FOR SALE WERE NOT GENERALLY BOUGHT BY PEOPLE ABLE TO USE THEM. THE GOODS TENDED RATHER TO FINISH UP STOCKPILED IN THE POSSESSION OF UNSUCCESSFUL PARTICIPANTS IN THE SCHEME, UNABLE TO FIND A MARKET. SUCH PARTICIPANTS TURNED INSTEAD TO RECRUITING FURTHER PARTICIPANTS IN ORDER TO RECOVER ANY SUMS THEY HAD THEMSELVES PAID TO JOIN THE SCHEME.

* PARTICIPANTS WERE LURED INTO SUCH SCHEMES BY THE PROMISES OF

LARGE REWARDS WHICH COULD SELDOM BE ACHIEVED. IT WAS MORE USUAL FOR A PARTICIPANT TO LOSE THE MONEY THAT HE PAID TO JOIN THE SCHEME.

ACCORDING TO THE SPOKESMAN THE ORGANISERS OF SUCH SCHEMES TENDED TO USE SOPHISTICATED AND HIGH PRESSURE RECRUITMENT TECHNIQUES.

+THERE IS EVIDENCE THAT IN HONG KONG THEY TEND TO ATTRACT GULLIBLE YOUNG PEOPLE, WHO HAVING JUST LEFT SCHOOL, ARE DRAWN BY PROMISES OF RICH REWARDS AND ARE INSUFFICIENTLY MATURE TO REALISE THAT THOSE REWARDS ARE UNLIKELY TO BE REALISED,+ HE SAID.

THE SPOKESMAN ALSO POINTED OUT THAT THERE WAS GENERAL AGREEMENT AROUND THE WORLD THAT PYRAMID SELLING SCHEMES WERE OBJECTIONABLE, AND MANY COUNTRIES HAD INTRODUCED LEGISLATION TO PROHIBIT OR CONTROL THEM.

HOWEVER, THERE ARE A NUMBER OF REPUTABLE DIRECT SELLING ORGANISATIONS USING SALESMEN WORKING ON A COMMISSION BASIS OPERATING IN HONG KONG, AND THE BILL HAS BEEN CAREFULLY DRAFTED TO EXCLUDE THEM FROM ITS OPERATION.

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