Traditional Chinese Simplified Chinese Email this article
Pyramid Schemes Prohibition Ordinance comes into effect on January 1

     The Pyramid Schemes Prohibition Ordinance (the Ordinance) will come into effect on January 1, 2012.

     A spokesman for the Commerce and Economic Development Bureau said today (December 23), "The Ordinance could more effectively combat the pyramid schemes by providing a more precise interpretation of 'a pyramid scheme', extending the regulatory reach and increasing the maximum penalty."
     The Ordinance defines more clearly what constitutes a "pyramid scheme". Based on the fundamental characteristics of a pyramid scheme, the definition defines a pyramid scheme as a scheme in which new participants must make a payment (or other forms of benefits) to other participants, and such a payment or benefit is entirely or substantially induced by the prospect that they will be entitled to receive a benefit which is derived entirely or substantially from the introduction of further new participants.  In short, a "pyramid scheme" is a scheme under which the main incentive for a participant to pay to join is the opportunity to receive benefits from the introduction of further new participants.

     The Ordinance further provides that any participants, who induce or attempt to induce other persons to participate in a pyramid scheme, with the knowledge that the benefits they may get from joining the scheme are entirely or substantially derived from the introduction of further new participants, commit an offence. Upon conviction, they may be liable to a maximum penalty of HK$1,000,000 and imprisonment of seven years.

     The Ordinance in draft form was introduced into the Legislative Council on June 1, 2011 and was passed on December 7.

     The spokesman also urges members of the public to exercise extra caution.

     "When you are asked to join a scheme or to participate in a training session and told that you can make easy and big money merely by recruiting new members, it is very likely that you are about to fall prey to a pyramid scam.  You will end up wasting your time and losing your money, or you will even be criminally liable," he said.

     The provisions of the Ordinance can be browsed at (

Ends/Friday, December 23, 2011
Issued at HKT 12:30


Print this page