Regulation on Prohibition of Pyramid Selling
Regulation on Prohibition of Pyramid Selling
Regulation on Prohibition of Pyramid Selling
Order of the State Council [2005] No. 444
August 23, 2005
The Regulation on Prohibition of Pyramid Selling,which was adopted at the 101st executive meeting of the State Council on August 10,2005,are hereby promulgated and shall go into effect as of November 1,2005.
Premier of the State Council,Wen Jiabao
Appendix: Regulation on Prohibition of Pyramid Selling
Chapter I General Provisions
Article 1 With a view to preventing frauds,protecting the legitimate rights and interests of citizens,legal persons and other organizations,maintaining the socialist market economic order and preserving social stability,this Regulation is formulated.
Article 2 The term"pyramid selling" as mentioned in this Regulation refers to such an act whereby an organizer or operator seeks for unlawful interests,disturbs the economic order and affects the social stability by recruiting persons,calculating and paying remunerations to recruiters on the basis of the number of persons a recruiter has directly or indirectly recruited or the sales performance,or asking the recruiters to pay a certain fee for obtaining the qualification for participation.
Article 3 The local people's government at or above the county level shall strengthen the leadership in investigating and handling the pyramid selling,support and urge all relevant departments to perform their administrative and supervisory duties according to law.
The local people's government at or above the county level shall,in light of actual needs,establish a coordinative mechanism for the investigation and handling of pyramid selling,and timely coordinate and solve those significant problems occurred in the work relating to the investigation and handling of pyramid selling.
Article 4 The department of industry and commerce administration and the public security organ shall,pursuant to this Regulation,investigate and handle the pyramid selling within their respective duties.
Article 5 When investigating and handling the pyramid selling,the department of industry and commerce administration and the public security organ shall,adhere to the principle of combining education with punishment,and shall instruct citizens,legal persons or other organizations to voluntarily abide by the law.
Article 6 All entities and individuals are entitled to report any pyramid selling to the department of industry and commerce administration or the public security organ,which shall,after receiving such a report,promptly carry out investigation and verification,handle it in accordance with the law and keep secret for the informer. Where the report is found to be true upon investigation,the informer shall be rewarded pursuant to the relevant state provisions.
Chapter II Types of Pyramid Selling and the Investigation and Handling Authority
Article 7 The following acts belong to the pyramid selling:
1. an organizer or operator seeks for unlawful interests by recruiting persons to participate in pyramid selling,asking the recruiters to persuade others to participate in pyramid selling,calculating and paying remunerations (including material awards and other economic interests,the same below) to the recruiters on the basis of the number of persons a recruiter has directly or indirectly recruited in a rotating way;
2.
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