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Gifting Clubs: A New Twist to the Age-Old Pyramid Scheme consfinancial.gif - 9186 Bytes

Gifting Clubs:

A New Twist to the Age-Old Pyramid Scheme

Do you have a friend or family member who wants to "let you in on the ground floor" of a fantastic business opportunity? Think twice if the opportunity involves making an initial "gift." According to the Better Business Bureau, pyramid schemes are resurfacing with a new twist. The latest versions are called "gifting" or "giving" clubs. To join the club, consumers are asked to make a contribution to the highest-ranking members, with titles such as captain or chairperson.

Gifting club promoters usually target closely-knit social and religious organizations, encouraging participants to bring in friends and relatives to help them assume a higher position in the ranks. In reality the clubs are nothing more than illegal pyramid schemes.

The problem is, like most pyramid schemes, illegal gifting clubs must continually recruit ever-increasing numbers of members to survive. When the supply of people runs out, the pyramid collapses, and most people at the bottom of the pyramid lose their money.

If you're approached about joining a club but you aren't sure if it's an illegal gifting club, the BBB and the Federal Trade Commission remind you to:

Consider that a legitimate gift has no strings attached and is not an "investment."
Avoid being misled into thinking a gifting club is legitimate because the ads say that members consider their payments a gift and expect nothing in return. This is an attempt to make an illegal transaction look legal.
Be wary of success stories or testimonials of tremendous payoffs. Very few members of illegal gifting clubs or pyramid schemes ever receive any money.
Take your time. Don't buckle under to a high-pressure sales pitch that requires you to join immediately or risk losing out on the opportunity. Remember, solid opportunities - and solid friendships - aren't formed through nerve-wracking tactics.