Promotions promising easy wealth by joining a cash gifting program or gifting club are flourishing on the Internet. BBB warns that cash gifting is not a legitimate way to make a few extra dollars, and in fact, is nothing more than a pyramid scheme.
Like most pyramid schemes of the past, cash gifting operations target people with some form of an affinity, such as women’s clubs, community groups, church or social clubs, and special interest groups. But in keeping with the digital age, schemers have moved operations online and are now marketing their programs as easy ways to make money in a tough economy through videos on YouTube, paid ads on Google and attractive Web sites that engage victims.
While those behind the scams vary, the content is usually the same. Typically, a person explains—in vague terms—that they’ve discovered a new program to help people make money through cash leveraging or cash gifting, and might even show an envelope with cash inside to prove the effectiveness of the program.
Ponzi schemes and money-making opportunities promising big returns for little work can be enticing to millions of people struggling with today’s economy. But anyone tempted by slick cash gifting marketing appeals should run in the opposite direction, or they run the risk of being the next person ripped off by a pyramid scheme.
Some cash gifting schemes are touted as fundraisers for a good cause or as an empowerment program to help people help themselves. The cost join the program is anywhere from $150-$5,000. After making the contribution, which is funneled to people farther up the pyramid, participants must then convince more people to join in order to start making money themselves.
Recruiters may claim that the operation is legal and often allude to IRS laws regarding gifting. However, Hawaii and almost every state has laws prohibiting pyramid schemes, and the Federal Trade Commission has issued warnings about cash gifting clubs.
BBB advises people to ask themselves three questions in order to evaluate dubious money-making opportunities:
• Do I have to make an “investment” or give money to obtain the right to recruit others into the program?
• When I recruit another person into the program, will I receive what the law calls “consideration” (that usually means money) as a result?
• Will the person I recruit have to make an “investment” or give money to obtain the right to recruit and receive “consideration” for getting other people to join?
If the answers are “yes,” BBB warns people to steer clear of the scheme, don’t give in to tempting claims online and never buckle under to high-pressure sales pitches, even when they come from the mouth of a trusted friend, co-worker, neighbor or church member.
For more tips from BBB to avoid scams and other money-making scams, start with bbb.org.