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Fake friends: Pyramid scheme disguised as socializing spreads in Japan amid COVID

TOKYO -- A group of young people standing by in front of major stations in Tokyo and Osaka, who approach pedestrians and ask things like "Do you know a good izakaya around here?" may actually be linked with organizations suspected of running a fraudulent pyramid scheme.

    Members of such groups exchange contact information with many random people who pass by, and after keeping in touch as "friends," pressure them into "becoming business owners" and buying products. This sort of fraud strategy has been spreading in Japan amid the coronavirus pandemic.

    This May 2021 photo (partially modified) taken near JR Koenji Station shows two men on the right approaching and asking a young individual if they know a good bar in the area. The pair was seen approaching 50 people in around seven hours on this day. (Mainichi/Takashi Kokaji)

    Before JR Koenji Station in the capital's Suginami Ward, two men aged in their 20s to 30s who wore casual clothing followed the movements of people passing by, as if they were hawks watching for prey. When they caught sight of a young man, the two exchanged looks and went to talk to him in a friendly manner. "Do you know of a good izakaya bar nearby?" Once the target informed them of a location, the two asked his age, occupation and other information in rapid succession.

    "Thanks. Let's get drinks next time," said the duo, and the target agreed to share his contact information as one of them took out a mobile phone. However, instead of heading to the bar that the man introduced to them, the duo walked toward another young individual who was by themselves and repeated the same question.

    This Mainichi Shimbun reporter witnessed at least 90 people making the same sorts of approaches to pedestrians in front of major train stations in Tokyo, such as Shinjuku and Shibuya stations, during the spring and summer of 2021. Similar tactics have also been gathering attention on social media. I was thus driven to exchange contact information with a man in his 30s who asked me whether I knew any good places to drink, and kept in touch with him for some three months.

    The day after we exchanged contact information, the man invited me to a drinking party taking place at a rental conference room near Takadanobaba Station. "It's sad that there are no opportunities to drink amid the pandemic, right? I have many connections. I've called my mates," he said. Ten men and women in their 20s and 30s gathered, and all of them called each other by nickname. On our way home after the get-together that lasted for about three hours, the man asked whether I was satisfied with work and life. He took out a book, and said, "This is super famous. Let me hear your thoughts." It was the exact same book online users cautioned as commonly used by pyramid scheme solicitors.

    After the meetup, the man continued to contact me two to three times a week, and invited me out to play five-a-side soccer, barbecue, and even an opportunity to play a board game for learning how to gain unearned income, or money earned through means other than labor. The man repeatedly remarked, "It would be great if we could live on unearned income in real life too, eh?"

    The man pointed out that to realize my dream, an annual income of 20 million yen, or around $176,000, would be necessary. He tried to persuade me that to make that much money, I must become a business owner and manage my own establishment, and said it is important to cooperate with like-minded companions. He described that his own "master" is a woman who earns an annual income of 20 million to 30 million yen "just by sitting around at home." However, the man provided no detailed explanations. Furthermore, after I was invited to join management seminars and other events requiring fees, I cut off communication as I may end up contributing to funds for illegal activity.

    I did my research on the type of methods used by the man on social media and through other means, and found multiple individuals who had been members of organizations suspected of carrying out pyramid scheme marketing. The organizations go by names such as "businesspeople group," "environment," "academy," and "team," and are believed to consist of several thousand members primarily in Tokyo and Osaka.

    A man in his 30s who worked at a company in Tokyo participated in such activities for around two years after a friend during his student years invited him to a seminar on business management. As a result, he lost several million yen, or tens of thousands of dollars, in savings, and shouldered debts totaling 500,000 yen, or roughly $4,400, from a consumer loan firm with high interest rates. He eventually was driven into a situation where he was barely getting by, and ate only one dish of pasta topped with ketchup per day.

    At the business management seminar, the lecturer urged the importance of "making friends," and told him to call on people in front of stations. He was told that if he could make 50 "friends" under his business "master," he could also be promoted to the position of branch owner, resulting in a dramatic rise in his annual income.

    When he confided in his "master" that he was struggling to make friends, the mentor said he "may not have been able to concentrate," and recommended that he make a career change and move into a shared house where he lives together with fellow companions. A few months later, the mentor told him to make monthly purchases of 150,000 yen's (about $1,300) worth of a certain company's beauty products.

    The mentor pressed him to purchase the products with cash, saying, "if you're going to aim for a monthly salary of 1 million yen, you need to make investments of 10 to 20%," and "once you start running a business, you need to be able to make snap judgments on investments totaling tens to hundreds of million yen." Though he was hesitant, he could not betray his master.

    The man lived in the shared house for one year, and engaged in "making friends" downtown with other members every day of the week. When he finally came to his senses, he had lost all his assets. He commented, "I believed that whatever my master said is always correct. I was fooled along with the rest of my associates."

    This organization's method is a business model which is thought to fall under the "multilevel marketing transactions" regulated by the Act on Specified Commercial Transactions, and expands its size through a chain of encouraging others to buy products and services as well as recruit new participants. The law prohibits carrying out the marketing scheme without informing individuals of the purpose in advance. The act of building interpersonal relationships by feigning accidental encounters on the street, and ultimately urging individuals to buy products has the potential of violating the law. The Consumer Affairs Agency's consumer transaction section commented, "We'd like to closely monitor the organization's actual nature."

    The emergence of this new approach also seems to be influenced by the pandemic. Pyramid schemes usually have members dragging acquaintances, friends and other close people into the program. However, "as close ties have not been able to be constructed in person amid the pandemic, the groups must have switched to the method of approaching an unspecified large number of people." The leaders of the organization were once members of multilevel marketing scheme groups themselves.

    Masaki Kito, a lawyer known for helping victims of fraudulent business practices, commented, "The method is suspected to be illegal multilevel marketing while feigning legitimacy. It's a stereotypical brainwashing technique that makes individuals live in groups and worship the top figure as someone with great authority." He sounded the alarm over the new method, saying, "In addition to an increase in people with reduced income due to the coronavirus, we spend more time at home, and are liable to become overdependent on relationships we wouldn't usually rely on."

    (Japanese original by Takashi Kokaji, Lifestyle and Medical News Department)

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