Hebei health products company suspected of pyramid schemes

Heads of a health products company in Hebei province have been held by police on suspicion of organizing pyramid schemes, a government-led investigation team said on Tuesday.

The company - Hebei Hualin Acid-Base Biotechnology Co - was accused last week in media reports of making exaggerated and false claims in advertisements and being involved in pyramid schemes.

The local government in Huanghua, a county-level city in Cangzhou, Hebei, where the company is based, began an investigation into the company on Sunday.

After a two-day investigation, the primary managers of Hualin and related people were detained by police, according to investigators, who added that a thorough investigation will continue and anyone found responsible for misbehavior will be punished.

On Jan 9, Henan Metropolitan Channel, a television station in Henan province, reported that Hualin was selling a type of health equipment that its employees claimed could promote the acid-base balance of the human body through electrotherapy.

In the report, a female massage therapist surnamed Hu said the equipment, the Acid-Base DDS Cosmetology Health Massager, can send out a current and transmit it through her body to a patient's body while she is doing a massage.

The therapy process can help expel toxins from the body and adjust the acid-base balance, thereby curing diseases, Hu was quoted as saying.

The equipment had not been approved for sale by the government.

According to a direct-sales management website run by the Ministry of Commerce, Hualin was allowed to directly sell eight kinds of cosmetics, including hand lotions, facial cleansers and organic essence.

The company, which also sold other health products, recruited product sellers and promoters through training meetings during which lecturers would tell attendees that they could become members and earn money by selling Hualin's products and also by recruiting other new members.

But to be a member, a person needed to buy products first and pay membership fees.

A member is rewarded after he or she recruits other members. The more a new member pays at first, the more rewards he or she stands to receive, the TV report said.

The investigation into Hualin follows another similar probe last month into Tianjin-based Quanjian Nature Medicine Technology Development, another health products company.

Quanjian was accused in online reports of making exaggerated claims in advertisements and being involved in a pyramid scheme.

After investigation by local authorities, 18 suspects, including the chairman and founder of Quanjian, were detained on suspicion of organizing a pyramid scheme and engaging in false advertising.

The State Administration for Market Regulation and 12 other central government departments launched a nationwide campaign on Jan 8 to crack down on wrongdoing in the health products market.

The administration said that during the 100-day campaign, law enforcement officers will focus on food, equipment, daily necessities, small home electrical appliances, wearable articles and services that claim to promote health.

Violations include false advertising, the production and sale of counterfeit or low-quality products, illegal direct selling and pyramid selling.