Many desperate young jobseekers fall victim to organized swindles
Dozens of young people mostly in their 20s sit on the floor in an office of a firm running pyramid schemes in Songpa, Seoul, after a police raid on Dec. 1 last year. / Korea Times
By Kim Tae-jong
A 20-year-old university student in Seoul received a phone call from an old high school friend last summer, offering him an opportunity for easy work with big paychecks.
The collegian immediately accepted the offer, thanking his friend for the chance, as he needed to save some money for tuition fees for the next semester as he had been just discharged from military service.
But it didn’t take long before he realized it was the beginning of a nightmarish and tortuous experience. After visiting his friend’s office in southern Seoul, he found himself lured into a pyramid scheme.
Managers at the firm tried to brainwash him into believing he could make a large sum with them during “training” along with dozens of other ``worker bees,'' who lived together in the small office. They took away his cell phone and would not allow him to leave the office.
“It was such a horrible experience,” he wrote on Anti Pyramid, an online community for victims of pyramid schemes. “I didn’t know what to do. They just told me to buy their products and recruit other people for the scheme to climb to the upper levels.”
What he had left when he finally escaped from the firm was 10 million won in debt as he was forced to borrow money through student loans to buy products from the company.
“I just wanted to financially support my parents,” he wrote. “But I can’t go see them now because I’m so sorry. Now I’m doing some part-time jobs to repay my loans.”
Personal accounts flood the website, most of which are written by young college students and graduates.
According to a survey last year, about 75 percent of university students have been approached by a direct-selling business at least once.
The survey on 543 university students by Incruit, an online job recruiting agency, also showed about 85 percent of respondents said someone they knew such as friends and relatives had tried to lure them into a pyramid scheme.
About 65 percent also said scammers approached them with the promise of an “easy job with big paychecks.”
The most popular item in pyramid schemes is dietary supplement products, followed by cosmetics and mobile phones.
Warnings on pyramid firms
With the economy in a downturn, many desperate job seekers have fallen victims to professional pyramid companies. To prevent pyramid schemes from running rampant, the Fair Trade Commission (FTC) has launched a campaign to warn that jobseekers to be beware of such scams.
“As college tuition fees and the unemployment rate have been on the increase, students seem to be easily lured,” an FTC official said. “It’s really hard for them to get out of such schemes, probably only after they become delinquent borrowers. So they should always beware of get-rich-quick schemes.”
The FTC will distribute over 15,000 leaflets to 140 universities across the country to inform students of the risks and damages of pyramid schemes. The anti-trust regulator will also upload a video clip about pyramid scams on the official websites of universities and recruiting portal sites.
Such measures come after the recent crackdown on eight pyramid companies, involving some 5,000 victims in their 20s. The police have arrested nine scammers and booked another 240 without physical detention.
A local court also recently sentenced the head of a pyramid firm to two and a half years in prison and fined him 1.92 billion won for an illegal pyramid scheme, which victimized over 100 people in their 20s and sold them products worth 19.2 billion won between March 2010 and last July.
Investigations into other operators of pyramid firms are also underway.
The FTC estimated there were about 3.5 million employees in the legally permitted multi-level marketing industry, which posted 2.5 trillion won in sales last year.
Under a related law, network marketing or multi-level marketing is not illegal, which scammers take an advantage of to hide a pyramid structure under the name of a legal entity.
“If the money you make is based primarily on the number of distributors you recruit and your sales to them, then it is highly likely to be a pyramid scheme,” the FTC official said.