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Time for pyramids to crumble

Published: 29 Dec. 2011, 20:02

The JoongAng Ilbo has reported on the devastating lives of 5,000 college students who were roped into modern-day slavery in the form of a new type of pyramid scheme in September. As it turned out, the students were living crammed in the basement of small buildings under appalling conditions in neighborhoods around Songpa District in southeastern Seoul. They were forced to sell products and recruit new clients under constant surveillance by professional agents working for the scheme.

Under strong pressure, they had to deceive families and friends to bolster their sales performances. The young people were tricked into believing that they could make easy money, but instead they fell into an irreversible debt trap. The police eventually raided and arrested several illegal marketing companies in a large-scale crackdown after the paper’s investigative report exposed the dirty marketing practice two months ago.

But a recent follow-up report discovered that the pyramid marketing companies are still active, recruiting workers illegally and running inhabited “boiler rooms,” as they had been before. Thanks to the massive crackdown, however, the number of recruited students decreased from around 5,000 to 1,700, and the indoctrination centers from 113 to 24.

The operators have basically relocated to other parts of Seoul and Gyeonggi to escape the notice of the police. The bigger problem is that there are no specific legal grounds to restrain and punish these illegal marketing activities. Currently, only the law on home sales can regulate pyramid-scheme marketing activities. But these operators abuse loopholes and register the victims as salespeople to gain the licenses they need to operate.

The legislature must pass a revised bill on home sales to effectively regulate and punish new types of illegal marketing activities in order to prevent further abuses and victimization. The Fair Trade Commission’s proposed bill has been sitting idle at the National Assembly for seven months and has only recently passed a subcommittee of the Legislation and Judiciary Committee.

In order to enact the bill, the FTC should raise fines drastically, and the legislators must act fast to end the shameful modern-day slavery of our vulnerable young people. The antitrust watchdog should also continue to keep a close watch on pyramid marketing companies and map out sustainable measures to root out this shameful practice.