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The Government issues a consultation paper today (December 7) to seek public views on a package of proposed legislative amendments aimed at eradicating pyramid schemes.
Stressing the Government's commitment to eradicating such schemes, a spokesman for the Commerce and Economic Development Bureau said that pyramid schemes did not serve any economic purpose as they rewarded participants entirely or primarily for the recruitment of further new participants and involved little or no genuine economic activity.
These schemes would eventually collapse when recruitment ran out, resulting in economic loss among participants, particularly those who joined at a late stage. As participants might recruit their friends or relatives into such schemes, they might come under social or family pressure when the schemes fell through, the spokesman said.
At present, the Pyramid Selling Prohibition Ordinance (Cap. 355) prohibits any person from knowingly establishing, advertising or managing pyramid selling schemes.
"However, with the emergence of new tactics amidst changing socio-economic conditions, the Government has reviewed the provisions and operation of the Ordinance and proposed a package of legislative amendments with a view to combating pyramid schemes more effectively.
"The Government has drawn up the proposals after examining the legislative provisions in other jurisdictions and taking into account views expressed in the community, including legislative councillors," the spokesman said.
The proposed amendments are as follows:
(a) to define "pyramid scheme" as a scheme in which new participants make a payment, and such a payment is entirely or substantially induced by the prospect that they will be entitled to receive a benefit for the introduction of new participants, irrespective of whether the scheme involves any sale or marketing activities;
(b) to curb the proliferation and expansion of pyramid schemes, we propose that persons who induce other persons to join, with the knowledge that the benefits they may receive are entirely or substantially derived from the introduction of further new participants, should be subject to criminal sanctions, just as those who knowingly establish, advertise or manage pyramid schemes; and
(c) to enhance the deterrent effect, the maximum penalty prescribed should be increased from a fine of $100,000 and imprisonment for three years, to a fine of $1,000,000 and seven years in prison.
Members of the public can access the public consultation paper at www.cedb.gov.hk/citb. They are invited to give views on or before January 31, 2011.
The Government will consider public views received before finalising the legislative amendments for introduction into the Legislative Council before mid-2011.
Ends/Tuesday, December 7, 2010
Issued at HKT 15:29
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