Gifting Club "Gotcha"
When is a gift not a gift? When
its a "gotcha."
In a scam 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 from within their own
neighborhood or church group.
In reality, the clubs are illegal pyramid schemes. New club members give
cash "gifts" to the highest-ranking club members, with titles such as
"captains." And theyre 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."
The problem is that, like most pyramid schemes, illegal gifting clubs must
continually recruit ever-increasing numbers of members to survive. When the clubs
dont attract enough new members, they collapse. Most members who paid to join the
clubs never receive the financial "gifts" they expected, and lose everything
they paid to join the club.
Dont Get on the Receiving End of a Gifting Club
Promises of quick, easy money can be a powerful lure especially
when it comes with the additional benefit of new friendships.
If youre approached about joining a club but you arent sure if
its an illegal gifting club, the Federal Trade Commission reminds you to:
Consider that a legitimate gift has no strings attached and is not an
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. Dont 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 arent formed through
To File a Complaint
If youve 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
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
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
FEDERAL TRADE COMMISSION
FOR THE CONSUMER