I know the “pyramid scheme” has been discussed here before, but I need some help.
A woman who works with me has been talking about a friend who told her about “gifting”. Basically you join the group (by invitation only) and give $2000.00!! as a gift to the name on top of the pyramid. You then sign up 2 more people. Once you sign up 2 more people, you move up a level to “sophmore”. Eventually you work your way to the top and,of course, get a lot of money. You are only allowed to get $16,000, though. After that, as member of the close-knit group, you step down because you have earned your share–but you may at some point participate again.
When I heard this my first thought was obvious scam, and I told her so. My co-worker claimed that she thought so too, but her friend who told her about the “gifting” had actually made $16,000 in a few weeks and was so excited that she was telling all those she knew who needed money.Then my co-worker’s friend actually lent her the $2000.00 to join the group saying, “Just pay me back when all the money comes in.”
Still thinking scam I said to myself “Well, at least you won’t lose your own money.” Then I promptly forgot about the whole thing.
Today I learned that my co-worker had talked 2 others into investing $2000.00. They’re all sitting around waiting for the cash to come in and get rich. Furthermore, one of the new enrollees enthusiastically tried to get me to sign up.
Now here’s the deal. In order to sign up you must participate in a 3-way call with another group member who will give you the details. if I were to join, say, I would get in a 3-way call with my friend, myself, and this unknown third. I cannot have the names of others participating until I pay up. It’s all supposed to be hush-hush because even though the “gifting” is legal it should only be among friends and talking about it with lots of people could “pollute” the group.
What should I do? Is there even a snowball’s chance in hell that this is legit? Should I call the cops?
Yes, this is a scam…essentially a pyramid scheme. Consider this…everyone puts in $2000 and expects to get back $16,000. That means for each person who signs up, they must solicit eight other people to join in order to make this target. It might begin to work at first…but eventually the pool of “suckers” is gonna dry out and the people at the bottom of the pyramid are gonna lose out. I am by NO MEANS a lawyer, but I do believe that this is illegal, and you may want to consult appropriate authorities to see.
I’d say about the only twist is the whole ‘friend’ angle and hush hush nature of it because one worry you have is that you are the last sucker. But presumably if everyone is at least a quasi ‘friend’ you have less of a chance of the person who says they are giving you $2000 somehow not coming through. Friends are generally more dependable. The hush hush part, of course, makes it seem like you are ‘special’ and have become part of some exclusive club, though this actually works against it because it makes it harder to recruit new suckers. I think the REAL reason is they don’t want word to get to the cops.
There was an E-mail message going around that did basically the same thing. It was something like… Send $1.00 to everyone on the list, remove the top name, add your name to the bottom of the list, and forward the e-mail to as many people as you know so that they all can do the same thing.
this is a classic pyramid scam. the last time i heard it going around was in the 70s and it was in vogue among innercity black folks. classic. a bunch of people are going to get stuck, but maybe not you if you are close to the top.
This is running around my city right now also. Seemingly intelligent people are falling for it. It is even sneakier here - you put in $1000 and get a mere $4000 back in a couple of weeks. Is it a pyramid? “No, no, it’s a tree!” Right.
The only way a person can put in $2000 and get out $16000, is for seven other people to put in $2000 and get out nothing. That’s assuming this scheme is no more dishonest than that. In reality, there is almost certainly someone who is taking out a lot more than $16000, so your odds are therefore even worse. Pyramid schemes all work by one general rule: If you’re not cheating someone, you’re being cheated.
A scam, an Old scam (with a new name), and it is illegal in every state I know. I would REALLY suggest that none of the transactions use the US mail, or cross state lines, or else you are all in DEEP kimchee.
I, like everyone else, will tell you it’s a pyramid scheme. The “Gifting Club,” and a variant called the “Dinner Party,” is mainly being pitched among women as an “empowerment” kind of function. It’s big in the Pacific Northwest and Mid-Atlantic right now. See:
The Sisterhood Scam (this one has a small sidebar that mentions that the Dinner Party scheme is also known as a “Gifting Club.”)
As far as what to do, (i) don’t give any of your own money to it; (ii) if the person recruiting you is a friend, encourage her to take her losses and not drag any of your other friends into it; and (iii) if the person recruiting you is not a friend (or the person who recruited your friend is not a friend), report it to the cops. They may be able to chase it back up to the top and at least shake some of the money free so people who got suckered can get a little bit back.
Thanks for the info and the links. I printed all this stuff up and will be taking it to work to share with the folks involved. I’m sure they’re not going to want to read it, but at least I can try.
The sad thing is these co-workers involved are all very decent people. One is a struggling mother with 4 kids. It really pisses me off that they could get taken advantage of so easily and so callously.
Biotop, having just seen Reznor in concert Monday night, I can give an eyewitness account that the phrase actually is “can this world really be as sad as it seems”. Doesn’t make any difference, I just wanted to boast about seeing him live.
I can understand people falling for Ponzi/Pyramid schemes that are repackaged (“Gifting”), but I can’t figure out who falls for the email versions that say, “Send a dollar to the person at the top of the list”.
Can’t even the most slack-jawed of yokels realize that the person who started it will send out ten thousand “first-generation” emails with his name at the top of the list, and that 99% of the other people will put their name at the top of the list? And that the first-generation version must have several addresses, which means that the creator is logically forced to make them all his (or, if he’s utterly honest, friends of his)?
Gah!
P.S. Since this message is so wise and important, send a copy to 1000 of your friends and desperately insist that they do likewise. Do it now, before it’s too late!
P.P.S. No, don’t. And don’t delete this line, either.
If it looks too good to be true, it is. In any transaction, you should always ask youself, “where does the money (or other commodity) come from?” The people in charge of this sort of thing would have you believe that everyone gets more out than they put in. Where does that money come from? To help illustrate this, many spoofs on this scam substite something more concrete for the money: husbands, reproductive organs, etc. We all know that men don’t come from thin air, but people seem to think that it’s different with money. It’s not. End of story.
