Health company executives arrested, fined for pyramid sales scheme

A Shanghai health company, with nearly 20,000 members, which was involved in pyramid selling has been fined 470,000 yuan (US$67,143), the city's market watchdog said on Sunday. Twenty people have been arrested.

Shanghai Zunxun Health Science and Technology Co sold gene-testing programs at a cost of 200 yuan (US$28.78) and a free hospital reservation service at 3,600 yuan, which it claimed was a discounted price from more than 10,000 yuan, the Shanghai Administration for Market Regulation said. 

People who bought the products were promised they would enjoy preferential treatment plus a high profit if they developed more members, the administration said. 

The pyramid sales were conducted online, making them difficult to detect. The company spared no efforts to promote its products during the novel coronavirus epidemic, causing serious social impact.

The company had developed nearly 20,000 members, and turned over 12 million yuan.

It violated China's advertisement law and law against unfair competition.

The Yangpu District Administration for Market Regulation and police launched a joint crackdown. More than 20 employees of the company including its legal representative and key "clients" have been arrested for pyramid selling.