Illegal Multi-Level Marketing Scheme Caught Recruiting 3,500 Members with 'Free Cruise Trip' Bait, Pocketing 300 Million Won

Citizen Life Judicial Police Team Proves Charges with Cooperation from Multinational Payment Agency
Operating Multilevel Marketing Organization without Fair Trade Commission Registration
Up to 7 Years Imprisonment and Up to 2 Billion Won Fine

Illegal Multi-Level Marketing Recruitment Site (Provided by Seoul Metropolitan Government Civil Affairs Judicial Police Unit)

[Asia Economy Reporter Lee Hyun-joo] The Seoul Metropolitan Government's Civil Affairs Judicial Police Unit announced on the 10th that it has criminally charged seven individuals who operated an illegal multi-level marketing (MLM) sales organization in South Korea by acting as top-level members of a foreign MLM company, using cruise travel packages as bait.

This is the first case in which the Civil Affairs Judicial Police Unit has investigated the illegal recruitment of domestic members by a multinational MLM company headquartered abroad. The company they established was not a domestic corporation set up by the foreign headquarters, but an illegally created MLM sales organization in South Korea to recruit subordinate members.

The group set up business briefing sessions in 12 locations nationwide and recruited over 3,500 subordinate members over nine months, receiving approximately 300 million KRW in commissions. The apprehended group lured members by offering free cruise trips as bait and enticed them with promises of easy earnings through immediate bonuses and weekly matching commissions based on the number of recruited members.

According to the Act on Door-to-Door Sales, etc., it is illegal to establish, manage, or operate an MLM sales organization without registering with the Fair Trade Commission. Multinational companies headquartered abroad must also establish a domestic corporation to conduct business in South Korea. Violations can result in imprisonment of up to seven years or fines up to 200 million KRW.

Notably, the overall representative charged in this case committed the crime again while still under probation for a similar offense.

Park Jae-yong, head of the Seoul Civil Affairs Judicial Police Unit, stated, "For multinational MLM companies headquartered abroad, it is essential to thoroughly verify with relevant institutions whether they are members of compensation associations to protect consumers from damages," and added, "We urge citizens to actively pay attention and report any suspicious activities."

This content was produced with the assistance of AI translation services.