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 they’re 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 don’t 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.
Promises of quick, easy money can be a powerful lure – especially when it comes with the additional benefit of new friendships.
If you’re approached about joining a club but you aren’t sure if it’s an illegal gifting club, the Federal Trade Commission reminds you to:
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 consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.