Gyeonggi-do Special Judicial Police Crack Down on Illegal Multi-Level Marketing Organizations and Prepaid Funeral Service Operators in Large Numbers 'Exposed'

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province has uncovered a large number of sales operators running illegal multi-level marketing organizations and inflating sales unfairly, as well as prepaid funeral service companies that failed to comply with statutory deposit regulations.

On the 19th, the Gyeonggi Province Fair Trade Special Judicial Police Unit announced that it had identified three illegal multi-level marketing companies and booked 11 people on charges of violating the Door-to-Door Sales Act. It also uncovered two prepaid funeral service companies that did not comply with the statutory deposit ratio and booked three people, including CEOs, on charges of violating the Installment Transactions Act.

Company A had registered as a door-to-door sales business selling underwear, cosmetics, red ginseng, soap, etc., and registered as a sponsor door-to-door sales business in January last year. However, it was investigated to have actually created an illegal multi-level marketing organization and unfairly recruited 3,270 salespeople.

Using this method, it is suspected of opening centers in Bucheon and Busan by the end of last month and generating sales of 4.4 billion KRW.

Companies B and C registered as door-to-door sales businesses selling health functional foods and have been operating illegal multi-level marketing organizations from the end of December 2018 to recently. They are suspected of unfairly recruiting 711 salespeople in Goyang and Seoul and selling goods worth approximately 1.4 billion KRW.

Two prepaid funeral service companies that did not comply with the statutory deposit ratio were also uncovered.

The current prepaid funeral service system requires that 50% of the prepaid funeral product contract amount paid by consumers be deposited in a financial institution according to a consumer damage compensation insurance contract. However, the two companies caught did not comply with this.

Company D, after establishing a prepaid funeral service corporation in 2010, was found to have deposited only 622 million KRW, which is 31% of the total prepaid amount of 1.999 billion KRW paid by consumers, into a financial institution.

Company E, which also established a funeral service corporation in 2011, was found to have deposited only 55 million KRW, 45% of the prepaid funeral product contract amount of 122 million KRW paid by consumers.

Kim Young-soo, head of the provincial special judicial police unit, explained, "The two funeral service companies uncovered this time were operated by one person. Even after their prepaid funeral service registrations were canceled due to insufficient capital, they continued to conduct prepaid business in practice and received advance payments from many consumers."

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