At the beginning of 2019, a reporter from Rule of Law Daily wrote an article expressing his worries about the business models of Zhang Ting and Lin Ruiyang, and discussed the boundary between micro-business and pyramid schemes. Not acknowledging the operation of the micro-business brand "TST Court Secret" (hereinafter referred to as "TST") operated by the celebrity couple, Shanghai Dalway Company exploded at the end of 2021 - Shijiazhuang Yuhua District Market Supervision and Administration Bureau filed an investigation into the company's suspected use of the Internet to engage in pyramid schemes. Subsequently, the People's Daily commentator Micro published a comment on "cutting off the tumor of online pyramid schemes", pointing out that "relevant institutions and network platforms need to strengthen technical screening, tear open the packaging vests, and control all kinds of online and offline pyramid schemes" . According to this, it is necessary to clarify the boundary between social e-commerce and online pyramid schemes, and comment on the new dynamics of Zhang Ting and Lin Ruiyang.
Social e-commerce and online pyramid schemes are not the same legal concept. Social e-commerce is a social networking platform that integrates social elements into the sales model of e-commerce and is subject to e-commerce regulations. The predecessor of social e-commerce was micro-business, and based on the low evaluation of micro-business style, it changed new vocabulary. At present, social e-commerce is only used as a common concept in the industry and is applied in many normative documents. According to the industry standard "Social E-commerce Business Specification" that is still to be reviewed and approved:
Social e-commerce is based on interpersonal networks, the use of Internet social tools, engaged in commodity trading or service provision of business activities, covering the whole process of e-commerce such as information display, payment and settlement, and express logistics, is one of the important manifestations of new e-commerce. The main manifestations include social e-commerce, e-commerce socialization and traditional enterprise social e-commerce. Social e-commerce mainly includes innovative forms such as platform store-based social e-commerce, agent distribution-based social e-commerce, group-based social e-commerce, video live-streaming social e-commerce, and content-fan-based social e-commerce. Existing laws have not yet defined the legal concept of social e-commerce.
Network MLM is a business model for traditional MLM to upgrade and alienate with the help of the network, in which the network environment is the medium for implementing MLM activities. China's "Regulations on the Prohibition of Pyramid Schemes" stipulate three forms of pyramid schemes:
First, the organizer or operator, through the development of personnel, requires the developed personnel to develop other personnel to join (that is, commonly known as "pulling people's heads"), and calculates and pays remuneration to the developing personnel on the basis of the number of personnel who directly or indirectly develop on a rolling basis, so as to obtain illegal benefits;
Second, the organizer or operator, through the development of personnel, requires the developed personnel to pay fees or disguised fees (collecting entry fees) by subscribing to commodities, etc., and obtains the qualifications to join or develop other personnel to join, so as to obtain illegal benefits;
Third, the organizer or operator, through the development of personnel, requires the developed personnel to develop other personnel to join, forming an up-down-line relationship, and calculating and paying on-line remuneration (that is, "team remuneration") based on the sales performance of the down-line to obtain illegal benefits.
Based on the emphasis on social e-commerce to "people" as the center, with interpersonal network marketing, when there is a cross-level interest relationship between members, it may constitute network pyramid schemes. For example, in 2019, the Peanut Diary App was punished with administrative penalties for the online MLM membership level of up to 51 levels, with a cumulative commission of more than 450 million yuan, with a total of 74.56 million yuan forfeited.
TST's adoption of celebrity endorsements, mobile phone orders, national unified prices and other business methods are understandable, but it cannot hide the suspicion of pyramid schemes brought about by its hierarchical accrual model. For example, the self-media promotion award requires the team performance to be less than 2500 yuan, but the individual sales should reach 600 yuan, and the total performance of the direct agent for development is more than 1000 yuan. The monthly performance of the gold card meets 2500 yuan, which is divided into A to E grades, and the commission ratio of each level is also increased according to the team performance. In addition, there is a batch zero-difference bonus system. Although TST has repeatedly emphasized that the bonus is only related to the direct agent bonus of the development and has no relationship with the downline of the downline, this statement is only an attempt to circumvent the "three-level" case filing standard for the crime of organizing and leading pyramid schemes, and it is still suspected of team remuneration type pyramid schemes.
Recently, some TST dealers have revealed that they have spent a lot of money to buy a large number of goods to become the chairman, enjoying the "preferential treatment" of taking photos with stars such as Zhang Ting, and the company encourages the development of more chairmen. According to the relevant staff of the Yuhua District Municipal Supervision Bureau in an interview, Dalway already has three characteristics of MLM, namely the pyramid structure of pulling people's heads, paying door fees and team remuneration. Judging from the information that has been exposed, TST does not seem to have learned the lessons of the public opinion storm in 2019, but tries to use the interpersonal chain effect to further expand.
It should be noted that team remuneration should only be administratively punished, but "pulling people's heads", "collecting entry fees" + "defrauding property" = pyramid scheme fraud. If there is evidence of pyramid scheme fraud, it may constitute the crime of organizing and leading pyramid schemes and may be sentenced to more than five years in prison. In real life, similar criminal cases abound. I hope that the majority of social e-commerce companies will continue to warn themselves not to stray into the dirty flow of online pyramid schemes, otherwise, they may not only suffer severe administrative penalties, but also may be imprisoned.
Source: Rule of Law Daily
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