XN000022-1981-07-12 — Page 5

SUNDAY, JULY 12, 1981

ALERT AGAINST BANNED 'PYRAMID SELLING'

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SINCE THE SCHOOL HOLIDAYS ARE BEGINNING, THE GOVERNMENT IS CONCERNED TO ALERT SCHOOL LEAVERS AND JOB SEEKERS TO THE DANGERS ARISING FROM PEOPLE TRYING TO RECRUIT THEM INTO PYRAMID SELLING SCHEMES, A GOVERNMENT SPOKESMAN SAID.

PYRAMID SELLING IS BANNED IN HONG KONG UNDER A NEW LAW ADOPTED LAST YEAR.

ALTHOUGH INDIVIDUAL SCHEMES VARY, THERE ARE SOME COMMON

FEATURES.

A PARTICIPANT, HAVING FIRST PAID TO JOIN AND HAVING BOUGHT A FIXED AMOUNT OF GOODS TO SELL, IS GIVEN A PAYMENT FOR EACH NEW PARTICIPANT HE RECRUITS, A COMMISSION ON THE GOODS WHICH THESE NEW PARTICIPANTS BUY FROM THE COMPANY, AND SOMETIMES A COMMISSION ON ENTRY FEES PAID BY FURTHER PERSONS RECRUITED BY THESE PARTICIPANTS.

THE GOODS BOUGHT BY THEM TO RE-SELL ARE MORE OFTEN THAN NOT UNSALEABLE EITHER BECAUSE THEY ARE OVER-PRICED OR BECAUSE IN THE END THERE ARE TOO MANY PARTICIPANTS SELLING THE SAME GOODS IN A LIMITED MARKET.

AT THE TIME THE NEW LEGISLATION WAS INTRODUCED LAST YEAR IT WAS POINTED OUT THAT PYRAMID SELLING SCHEMES WERE OBJECTIONABLE FOR TWO REASONS:

* THEY SERVED NO ECONOMIC PURPOSE BECAUSE THE GOODS TENDED TO

ACCUMULATE UNSOLD IN THE POSSESSION OF UNSUCCESSFUL PARTICIPANTS WHO TURNED INSTEAD TO RECRUITING FURTHER PARTICIPANTS TO RECOVER ANY SUM THEY HAD PAID TO JOIN-

ON

*

PARTICIPANTS WERE OFTEN GULLIBLE YOUNG PEOPLE LURED INTO SUCH SCHEMES BY EMPTY PROMISES OF LARGE REWARDS. BALANCE IT WAS CONCLUDED THAT THESE YOUNG PEOPLE, WHO HAD JUST LEFT SCHOOL AND LACKED THE MATURITY TO SEE THE PITFALLS, COULD NOT BE EXPECTED TO PROTECT THEMSELVES.

FURTHERMORE, ORGANISERS OF SUCH SCHEMES WERE WELL VERSED

IN SOPHISTICATED HIGH PRESSURE RECRUITMENT TECHNIQUES AND IT WOULD BE NECESSARY FOR INEXPERIENCED OR YOUNG PEOPLE TO BE PARTICULARLY ALERT.

ANYBODY WHO SUSPECTS THAT HE IS BEING RECRUITED INTO SUCH AN UNLAWFUL SCHEME OR OTHERWISE COMES ACROSS ONE SHOULD REPORT IMMEDIATELY TO THE POLICE.

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