Legal basis: Article 224 of the Criminal Law of People's Republic of China (PRC) commits one of the following acts. Whoever, for the purpose of illegal possession, defrauds the other party of property in the process of signing and performing a contract, if the amount is relatively large, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also or only be fined; If the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years and shall also be fined; If the amount is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment, and shall also be fined or confiscated.
Article 4 of the Criminal Law Amendment (VII) adds one article after Article 224 of the Criminal Law as one of Article 224: "Organize and lead pyramid selling activities that require participants to pay fees or purchase goods and services in the name of selling goods and providing services, and form a hierarchy in a certain order, directly or indirectly based on the number of people who have developed, to induce and coerce participants to continue to develop others to participate, defraud property and disrupt economic and social order. If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and fined.