Pyramid companies tempt students with false get-rich-quick schemesLast July, university students who engage in illegal pyramid business schemes concentrated in the Geoyeo-dong and Macheon-dong areas in Songpa-gu, and their 25 bosses were booked without detention. They were dubbed “Geoma university students” by taking one syllable out of both Geoyeo-dong and Macheong-dong. As the police investigation went on, around 5,000 people, most of them university students, were found to be illegally employed and forced to work and live in severe environments.
“Students were brainwashed to be away from society and stay together in a so-called “office” and listen to lectures on strategies for selling more products or persuading someone to join the pyramid business to become rich quickly,” said a police officer at Songpa Police Station. “For example, 15 students stayed in a room that was about 45 square meters wide. They had to eat only a small amount of distributed food and there was no exception and they were monitored to keep them from running away, even when they went to restrooms or called their parents.”
The owners of pyramid businesses target university students, knowing their financial needs and lack of social experience.
“The companies know that university students need a lot of money for college tuition and job opportunities due to the recent youth unemployment crisis,” the official said. “Using these reasons, they persuaded the students with lies such as that they will help them earn a lot of money and even employ them.”
Most of the university student victims had to buy the companies’ products with their loans, and they were monitored every moment for sales increases.
“Multilevel marketing can be easily explained with the word ‘direct-selling,’” said Park Byeong-hoon, the manager of the Department of Public Relations at Mutual Aid Cooperative & Consumer (MAC&CO), a public institution that protects the rights of consumers who experience financial losses due to illegal pyramid marketing. “Multilevel marketing businesses do not have stores nor go through wholesale-retail trades. They run their businesses by employing consumers to sell their products directly.”
While multilevel marketing itself is not illegal, it conveys negative meanings in Korea because some people took advantage of the model illegally.
According to a study by Fair Trade Committee (FTC) in 2008, 13 percent of university students said they had been contacted by multimarketing businesses; among them, 17.5 percent were told to join the business or even buy the products, and 31.8 percent of the students who joined the businesses were forced to stay in the company’s housing or get trained on how to sell products and lure other workers. However, 92.3 percent of the victim students did not report to the police despite their difficulties.
“When you listen to the lectures so many times, you start to believe them,” a student who requested anonymity said. “Also, even when you want to escape, it is impossible since you are monitored all the time.”
The FTC warns students not to be deceived by the multi-marketing workers who have scenarios to persuade university students according to their personality, age, and financial situation.
“Students should always check whether the businesses are legally registered with the government as multimarketing businesses,” said Kim Sung-kyoon, an official at the FTC. “When the businesses seem suspicious, they should not join. They should not borrow money to buy products or receive training when the businesses force them.”
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