Recently, a Chinese furniture store located on Hamilton Avenue in Brooklyn’s Sunset Park area has been embroiled in merchandise and investment disputes. Several customers have reported not receiving their ordered furniture in a timely manner and have suffered losses due to participating in a so-called “membership dividend plan.” Some investors have put in thousands or tens of thousands of dollars without receiving returns, and it is said that there are now over a hundred victims voluntarily organizing a rights protection group on WeChat.
The furniture store had initially attracted customers through methods like “deposit in exchange for points” and “membership investment contracts,” where individuals had to pay upfront to become members, place orders by paying money, and were promised high returns. According to screenshots from WeChat, the store’s promotional advertisements claimed that all products were only given away, not sold, and by paying 80% of the selling price as a deposit, customers could receive the goods. By forwarding the message, an additional 10% commission could be deducted. The deposit would be refunded monthly for two years, and all items were non-returnable and non-exchangeable.
While some customers initially received partial refunds, the returns and delivery of goods have ceased in recent months. Upon visiting the store, some found it closed and deserted, with the owner claiming to be stuck in China due to being quarantined from a virus spread by Guangdong mosquitoes and promising refunds, denying accusations of absconding with funds. However, many victims remain skeptical of this explanation.
Complaints have reached the office of New York State Senator Chen Xu Li, who has urged victims to report to the police station or the district attorney’s office. The office’s communications director, Ling Fei, revealed that despite the WeChat group having over a hundred members, only four victims had personally come forward with evidence in the past two days. He emphasized, “The progress of the case depends on whether the number of victims is sufficient.”
The senator’s office further reminded victims to submit their information at Senator Chen Xu Li’s office (Address: 6605 Fort Hamilton Parkway, Brooklyn, NY 11219), contact number 718-333-0311, or they can directly report to the Brooklyn District Attorney’s office on the Chinese hotline at 718-250-2340.
In response to this situation, Mr. Lin, a sales manager at a furniture store in Flushing with over ten years of experience in furniture sales, stated that this “investment return” model is not new, recalling similar schemes that emerged in mainland China a decade ago, known as “consumption rebates.” For instance, if a customer pre-ordered goods worth five thousand yuan, the promise was to refund 5% to 10% annually, essentially allowing the customer to receive the goods for free in the end.
This kind of scheme initially builds credibility through “small initial returns,” but once the scale grows and the funding chain breaks, the funds ultimately vanish, and the operators disappear. While customers focus on the high monthly returns, the operators prioritize the customers’ capital. In the past, China experienced scams in the oil industry involving gas card fraud amounting to billions of yuan, where victims included truck drivers and gas station users.
Regarding legitimate furniture store practices, Mr. Lin emphasized that normal operations in the furniture industry involve a deposit system: customers typically pay only 10% to 30% as a deposit when placing orders, which secures discounts or reserves goods for one month until full payment is made for delivery. Sales promotions during holidays usually involve discounts or gifts (such as receiving a $100 gift for purchases over $3000) rather than investment dividends. Stock holding policies stipulate that even with full payment, goods are typically held for no more than three months, and situations of receiving payment without delivering goods do not exist.
He stated, “Investment promotions often conceal traps and are fundamentally high-risk consumer activities. Operators attract funds with high refunds, but once you hand over your money, you have no control over whether they continue their business or for how long. Be wary of anything promising fixed high returns.”
Mr. Lin pointed out that this modus operandi is similar to scams seen in mainland China in beauty salons and membership-based fraud: the initial stage lures customers to deposit and then sets simple conditions for a full refund, disappearing once the funds accumulate.
He warned, “Many times, the storefront is rented, and no matter how luxurious the decoration looks, it’s only a facade. Once the deposits accumulate to millions or tens of millions, the operator could close shop and vanish at any time.”
Mr. Lin urged consumers to be extremely vigilant regarding “investment promotions” boasting returns of 10% or even 20% annually, stating, “Businesses cannot sustain such high profits. It’s like a Ponzi scheme, using later investments to pay returns, and it will collapse eventually.”
He emphasized that even if the other party has a physical store, caution should still be exercised. If a 30% deposit has been paid, regular attention should be paid to the store’s activities because if the store suddenly absconds with funds, the deposit could be lost.
Drawing from personal experience, he mentioned that the store still retains deposits from two to three years ago, as customers did not request immediate delivery at the time. This occurred during a promotion offering a 50% discount on single orders, with customers needing to pay a 10% deposit to secure the discount. Even though the store did not immediately stock the items, customers were willing to wait. However, such occurrences are rare.
Mr. Lin cautioned that when operators skip town, consumers often face challenges in cross-border accountability and fund recovery, emphasizing that the risks should not be taken lightly.