Interpretation of compliance development path of new e-commerce companies such as Wechat business from TST suspected pyramid scheme

This paper takes the pyramid scheme involved by Darway Company as the breakthrough point, and analyzes it from three aspects: China's legal provisions on pyramid schemes, the boundary determination between Wechat business's legitimate business practices and pyramid schemes, and the compliance path, with a view to preventing the legal risks of new e-commerce enterprises such as Wechat business and escorting the normal network business environment!

(I) Administrative Law

1. Definition of MLM

In 25, the State Council promulgated the Regulations on Prohibiting MLM. Article 2 defines "MLM" as: "It refers to the organizers or business operators who develop personnel, and seek illegal benefits by calculating and paying remuneration to the developed personnel based on their direct or indirect number of personnel or sales performance, or requiring the developed personnel to obtain the qualification to join on the condition of paying a certain fee.

2. Specific behaviors of pyramid schemes-"soliciting people's heads", "collecting entrance fees" and "team remuneration"

Article 7 of the Regulations on the Prohibition of pyramid schemes explicitly defines "soliciting people's heads", "collecting entrance fees" and "team remuneration" as pyramid schemes and resolutely prohibits them. The specific provisions are as follows:

"The following acts belong to pyramid schemes:

(1) The organizer or operator, through the development of personnel, asks the developed personnel to develop other personnel to join, and calculates and pays remuneration (including material rewards and other economic benefits, the same below) to the developed personnel on the basis of the number of personnel directly or indirectly developing, and seeks illegal benefits;

(2) the organizer or business operator, through the development of personnel, demands the developed personnel to pay fees or pays fees in disguised form by subscribing for commodities, etc., so as to obtain the qualification to join or develop other personnel to join and seek illegal benefits;

(3) The organizer or business operator, through the development of personnel, requires the developed personnel to develop other personnel to join, forming an up-and-down relationship, and calculating and paying the online remuneration based on the sales performance of the offline, so as to seek illegal benefits. "

(II) Criminal Law

The Criminal Law Amendment (VII) of 29 stipulates the crime of organizing and leading pyramid schemes (hereinafter referred to as "pyramid scheme crime"). "In the name of business activities such as selling goods and providing services, organizations and leaders require participants to obtain the qualification to join by paying fees or purchasing goods and services, and form a hierarchy in a certain order. Whoever, directly or indirectly, uses the number of developers as the basis for remuneration or rebate, lures or coerces participants to continue to develop others to participate in pyramid schemes, defrauds property and disrupts economic and social order, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also be fined; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and fined. "

In 213, the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security jointly issued the Opinions on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Organizing and Leading MLM Activities (hereinafter referred to as the Opinions), which clearly defined the hierarchy and number of MLM organizations, that is, the concepts of "there are more than 3 people involved in MLM activities within the organization" and "there are more than three levels in the hierarchy".

Strictly speaking, regular Wechat business practitioners, as the main body of e-commerce, should be regulated by the E-commerce Law. In 218, the "Gathering Micro Store" and the snack e-commerce platform "Global Catcher", which had thrived on the rise of Taobao Hangzhou electric business circle and stepped on the WeChat ecosystem, were officially banned by Tencent for alleged pyramid schemes. These e-commerce companies are under the slogan of "mass entrepreneurship, innovation" and "playing mobile phones to make money", but their operation content is a new pyramid scheme based on a multi-layer distribution system and widely promoted, which is illegal. In recent years, the country has constantly regulated the field of e-commerce, and at the same time severely cracked down on pyramid schemes, which is also the key reason for the "thunderstorm" in Wechat business in recent years. As an industry giant in Wechat business, Dalway Company is suspected of pyramid selling, which inevitably makes people re-examine and further reflect on the legitimacy of Wechat business's business behavior.

(a) the characteristics of Wechat business's business behavior

1. It has a wide spread and quick benefits.

With the popularity of smart phones and the rapid development of internet plus, WeChat and friends circle have become common ways for people to communicate. The high number of WeChat users in China has brought everyone's circle effect into full play-Wechat business posted a dynamic in his circle of friends, attracting every WeChat friend to watch or forward it, which has a wide spread range and quick benefit, maximizing the clustering effect and the speed of group communication.

2. Convenient operation and low promotion cost. On WeChat, whether it is a circle of friends or a public platform, it is very convenient to push messages. From pushing to individuals, to specific business operations and follow-up contacts, all links can usually be smoothly carried out on smartphones; The promotion cost is also very low. As long as one mobile phone and ID card are basically operated with one button, only the information cost is needed for the promoters, which greatly reduces the promotion cost and contact cost.

3. The supervision is loose and the standard system is not complete. Wechat is a free and open platform, and real-name registration system has not been implemented. Users can change their nicknames or register multiple accounts at any time. However, because of its convenient and flexible operation, as the social software with the largest number of users in China, it is impossible to distinguish individual users from the business entities behind it, which means that the business behavior on Wechat is difficult to be regulated by the traditional corporate business behavior. In addition, China's network supervision system is still in the process of construction and improvement, and the lack of special regulatory means has also caused its loose supervision.

(II) Identification of the boundary between legal business operations and pyramid schemes in Wechat business

To identify legal business operations and pyramid schemes in Wechat business, we need to evaluate them from the following points.

1. MLM is often a business model that needs to distinguish the agent level and develop others as offline.

Due to the above characteristics of Wechat business's business behavior, Wechat business, a circle of friends, is prone to MLM. Most Wechat business operators unconsciously pass on the "sales concept" to relatives and friends in the course of business, trying to develop these people into team members. In other words, some Wechat business teams have a specific business model and need to distinguish between different levels and agents, because different levels have different rebate ratios, while some agents have started to continuously develop others to join the team in order to improve their own level. In addition, the closed promotion in Wechat business also leads to the need for Wechat business to expand its customers and enhance its profits through a multi-level business model. However, on the basis of the multi-level business model, there is a legal risk of pyramid selling by constantly developing others and rewarding the developers on the basis of their direct or indirect rolling number of people.

2. MLM usually involves hoarding goods and becoming an agent out of one's own pocket.

Take Dalway Company as an example. Although Dalway has a propaganda slogan of "zero franchise fee", it seems that it does not meet the requirements for paying the entry fee in MLM, in fact, many agents consume and hoard goods by themselves in order to maintain their sales qualification and commission ratio, that is, they become agents out of their own pockets, which is undoubtedly another form of entry fee.

3. One of the main income sources of pyramid schemes is to get agency rebates according to others' goods.

The profit model of Wechat business, and whether the salary sources of Wechat business operators are regular or illegal are the keys to judge legal marketing and pyramid schemes. If the sales performance of members mainly depends on "off-line" hoarding, fission, and their own money hoarding, and the salary source is also rebate according to the fission degree, it is suspected of pyramid schemes. The Opinions also clarified the definition of "team-paid" pyramid selling activities: the organizers or leaders of pyramid selling activities, through the development of personnel, require the developed personnel of pyramid selling activities to develop other personnel to join, form an online and offline relationship, and calculate and pay online rewards based on offline sales performance, and seek illegal benefits, which is a "team-paid" pyramid selling activity.

According to relevant news reports, the Darway agent involved in the pyramid scheme described the development model of the company's internal sales staff. After buying products with a price of 2,5 yuan, people will get a commission, and they need to continuously develop "offline" in order to make money. Spend 3, yuan to become a "chairman", form your own team and family, and earn money from "children and grandchildren" ... This kind of sales method is actually to distinguish the agency level, develop offline, smash the group to stock up goods (entry fee), and earn offline money with rebates (reward method). Therefore, Darway's business behavior basically conforms to the three pyramid schemes prohibited by the Regulations on the Prohibition of Pyramid Marketing, which is also the key to this investigation.

(III) The distinction between operational pyramid schemes and fraudulent pyramid schemes

In response to the alleged pyramid scheme in Dalway, the relevant investigation team members were interviewed and said: "Judging from the current investigation, this pyramid scheme belongs to an operational pyramid scheme, and the operational pyramid scheme is not enough to constitute fraudulent pyramid schemes at present. With the further investigation of the case, if he has fraudulent pyramid schemes, we will transfer them to the public security organs according to law. " Among them, how to distinguish between operational pyramid schemes and fraudulent pyramid schemes needs further discussion.

There is no word "defrauding property" in the definition of MLM in the Regulations on Prohibiting MLM promulgated by the State Council, but the determination of the hierarchy and number of MLM organizations in the Opinions clearly stipulates: "In the name of selling goods, providing services and other business activities, participants are required to obtain the qualification to join by paying fees or purchasing goods and services, and form hierarchies in a certain order. Directly or indirectly, the number of development personnel is used as the basis for remuneration or rebate, which induces and coerces participants to continue to develop others to participate, defrauds property and disrupts economic and social order. If there are more than 3 people involved in pyramid schemes within the organization and the level is above the third level, the organizers and leaders shall be investigated for criminal responsibility. " Compared with the definitions of pyramid schemes in the two documents, fraudulent pyramid schemes are characterized by "attracting people", "paying membership fees" and "paying fees" in the sense of administrative violation, and also require pyramid schemes to have the characteristics of luring and coercing participants to continue to develop others to participate and defraud property; As a result, it has disturbed the economic and social order to a serious degree, and there are more than 3 people involved in pyramid selling activities within the organization and the level is above the third level.

As for the specific identification of "defrauding property", the Opinions also clearly stipulate that the organizers and leaders of pyramid selling activities make up and distort national policies, fictionalize and exaggerate business, investment, service projects and profit prospects, cover up the real source of remuneration and rebate or other fraudulent means, and commit the acts specified in Article 224-1 of the Criminal Law, thus illegally profiting from the fees paid by the personnel involved in pyramid selling activities or the fees for purchasing goods and services. Whether the personnel involved in pyramid schemes think that they have been cheated does not affect the determination of fraudulent property. Simple "team-paid" pyramid selling activities aimed at selling goods and based on sales performance are not treated as crimes. In the form of "team remuneration", but in essence, pyramid selling activities that are based on the number of developers as the basis for remuneration or rebate shall be convicted and punished for organizing and leading pyramid selling activities in accordance with the provisions of Article 224-1 of the Criminal Law.

The distinction between commercial pyramid schemes and fraudulent pyramid schemes is also the key to the trend of this incident. As the above-mentioned investigators have shown, with the further investigation of the case, if fraudulent pyramid schemes are committed, they will be transferred to the public security organs according to law. Article 224 of the Criminal Law stipulates the crime of organizing and leading pyramid selling activities, and the object of its protection includes not only the property ownership of citizens, but also the market economic order and social management order. If the company established in Zhang Ting is found to have "lured and coerced participants to continue to develop others" and "defrauded property", which violates the provisions of Article 224-1 of the Criminal Law and the circumstances are serious, the organization leader will face the statutory maximum penalty of 15 years' imprisonment.

(4) the distinction between pyramid selling and direct selling

The public's question is that Amway (health brand) and Mary Kay (beauty brand) imported from the United States several years ago have also been promoted offline in many places in China. Why are these operators not suspected of pyramid selling? This requires distinguishing between direct selling and pyramid selling.

In 25, the State Council promulgated the Regulations on Direct Selling and the Regulations on Prohibiting MLM. Among them, the "Regulations on the Administration of Direct Selling" defines the single-level direct selling behavior as direct selling, and allows it to develop in an orderly manner under strict supervision. That is to say, it is legal for independent marketers to directly sell products and services to consumers in places outside fixed retail stores (such as personal residence, workplace or others) by face-to-face explanation and demonstration. The most fundamental criterion for distinguishing between pyramid selling and direct selling lies in the three elements of "attracting people", "admission fee" and "payment method". At the same time, if you are suspected of fraudulent pyramid schemes, you need to see whether there are "fraud, inducement" and other harmful consequences of "serious circumstances". Therefore, after 218, a large number of business entities such as "Amway" and "Mary Kay" obtained the "business license" issued by the Ministry of Commerce and adopted the "direct sales" mode according to law. Therefore, even if there were offline promotion activities in the early stage, they were essentially different from "pyramid schemes" in legality.

(I) Wechat business business operators

1. Seriously study relevant laws and regulations, and conduct regular rectification and self-inspection

Wechat business business operators should strictly follow the relevant norms such as the E-commerce Law, the Advertising Law, the Consumer Protection Law, the WeChat operation order, etc., restrain their business activities, pay taxes according to law, do not make inappropriate remarks, do not abuse market dominance, exclude and restrict competition, and strictly control quality. Operators should regularly check and rectify, maintain the sensitivity of norms, and protect the good operation environment of online e-commerce.

2. Change the promotion mode, multi-platform and multi-dimensional promotion

Wechat business operators should promote in multi-platform and multi-dimensional ways, take the road of social marketing, and avoid hoarding goods, buying and selling themselves, using acquaintances to attract people, and developing offline. Under the background of the Internet, operators should fully tap the advantages of the network, and return to the true "seller's identity" by opening micro-stores, entering the platform or live broadcasting and promoting cooperation, instead of "self-hoarding and self-selling". Only by returning to the essence of operators' business and trading identity can they operate better in compliance.

3. Strictly regulate business access behavior

Article 1 of the Electronic Commerce Law stipulates that e-commerce operators shall register market entities according to law. However, individuals who sell their own agricultural and sideline products and household handicraft products do not need to obtain their own skills in accordance with the law.