Rebate websites found running pyramid schemes

A growing number of rebate and coupon websites in China may face an industry reshuffle due to their involvement in pyramid schemes, analysts warned yesterday, as the government continued to close down problematic websites in the sector.

“These methods of marketing and investment fraud are harder to detect because of their integration in e-commerce,” Chen Shousong, senior e-commerce analyst with Internet market research firm Analysys International, told the Global Times. “But these practices will greatly harm the country’s e-commerce sector and the private capital market.”

Chen said there are two main operating methods for rebate websites in China: To give buyers 2 to 30 percent rebates, or to offer people rewards for all the money they spend on a purchase following an initial payment.

“The latter is actually a pyramid scheme that rewards those netizens who introduce others to register on the website and join the scheme,” Chen said… Read more

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