Seoul City Uncovers 3 Illegal Multi-Level Marketing Cases with 'Nominal Visits and Sponsorships'

The Seoul Metropolitan Government's Civil Affairs Judicial Police Unit announced on the 30th that it has uncovered three special sales companies, including door-to-door sales company A and sponsor door-to-door sales companies B and C, for unregistered multi-level marketing activities and has referred the cases to the prosecution.

Investigation results revealed that these companies were actually conducting multi-level marketing while only registering as door-to-door sales or sponsor door-to-door sales businesses, illegally operating and generating approximately 8.1 billion KRW in unfair sales.

First, company A, which registered only as a door-to-door sales business and was caught selling cosmetics through illegal multi-level marketing methods, exploited the trend of promoting cosmetics sales via influencers with social media presence (SNS) as a new type of crime technique.

Sponsor door-to-door sales company B is accused of generating unfair sales of about 7.1 billion KRW worth of cosmetics from July 2020 to September 2021 through an organization structured in seven levels, ranging from 'Associate Member' to the highest rank 'Executive Director,' based on sales performance of its sellers.

Another sponsor door-to-door sales company C was caught operating a special promotion (commission) payment system based on multi-level marketing methods that differed from the commission standards reported to the relevant authorities.

Meanwhile, the high sponsor commissions promoted by unregistered multi-level marketing companies to recruit sellers are only received by a very small number of top sellers, and most of the damages caused by illegal activities fall entirely on the lower-level sellers.

The Seoul Metropolitan Government emphasized that due to the closed nature of illegal multi-level marketing, active reporting by citizens who receive invitations to join suspicious multi-level marketing companies or who have suffered damages is crucial. Seo Young-gwan, head of the Seoul Civil Affairs Judicial Police Unit, stated, “The illegal multi-level marketing activities by businesses that are only nominally door-to-door sales or sponsor door-to-door sales continue. We urge special caution and will do our best to prevent these civil crimes and detect illegal activities, especially since the damages from illegal multi-level marketing are concentrated among the lower-income population.”

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