China's State Administration for Industry and Commerce has warned the public that existing illegal pyramid selling groups operate as much more tightly knit organizations.

Their activities are carried out in a more covert manner, and some groups have many of distinct characteristics associated with gangs or secret societies, said the paper.

The scam, also known as multi-level marketing, is a method of selling something through a hierarchical tier of salespeople. Promoted as a get-rich-quick scheme, it invariably leads to huge losses for those conned into participating.

From 1994, China adopted various measures to outlaw pyramid selling schemes. In April 1998, the State Council issued a circular formally banning pyramid sales.

But incomplete statistics reveal that since 1999, millions of people in China have participated in various forms of illegal pyramid selling activities with the volume of illicit business turnover approaching 10 billion yuan (US$1.2 billion), said the paper.

(Xinhua News Agency March 26, 2003)