Gifting

Program review by Merle Braley, Internet Marketing Advisor

Gifting Club Review -

What is a Gifting Club?

How Does a Gifting Club Operate and Who Profits?

In a scam that began spreading throughout the mid-Atlantic states and the Pacific Northwest, people pay to join a “gifting club,” billed in promotional materials as a private club with members eager to help new friends — often targeting people within their own neighborhood or church group.

According to the FTC a Gifting Club is an illegal pyramid scheme. The way it works is new club members give cash “gifts” to the highest-ranking club members, with titles such as “captains.” (I guess it pays to join early!) The new members are promised that if they get additional members to join the club, they, too, will rise to become captains and receive money – far more than they initially paid to join the club — from newer club “friends.” (Translation: “suckers”)

As is the case with most pyramid schemes, illegal gifting clubs must continually recruit ever-increasing numbers of members to survive. When the clubs don’t attract enough new members to keep the cash flowing, they collapse with most of the members who paid to join the clubs never receiving the financial “gifts” they expected, and lose everything they paid to join the club. (And they lose all their new friends.)

How To Tell If the “Club” is an Illegal Gifting Club?

Promises of quick, easy money can be a hard to turn down – especially when it comes with the additional benefit of new friendships. But, beware.

The promoter of the club is not going to call it a Gifting Club.

If you’re invited to join a club and you aren’t sure if it’s an illegal gifting club, the Federal Trade Commission reminds 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.

How to File a Complaint

If you’ve been victimized by a gifting club promoter, contact your local consumer protection agency, state attorney general and Better Business Bureau.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Reviewed and Edited by Merle Braley, Spring 2008

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| Category: Not Recommended, Scam |

Tags: consumer sentinel, criminal law enforcement, deceptive, file a complaint, fraudulent, FTC, identity theft, pyramid scheme, unfair