A “Secret Santa” among colleagues, friends and family can be fun. A gift exchange among online friends you haven’t met, though, could carry a hefty consequence. These gift exchanges, while they look like innocent fun, are really pyramid schemes – and are considered illegal.

The “Secret Sister” gift exchange campaign quickly became popular a few years ago through Facebook posts promising participants would receive up to 36 gifts, in exchange for sending one gift. Each holiday season the scheme pops back up. A newer version of this scam revolves around exchanging bottles of wine; another suggests purchasing $10 gifts online.

How the Scam Works

The scheme starts with a convincing invitation, either by email or social media, to sign up for what seems like a fun gift exchange. All you must do is provide your name and address and personal information of a few additional friends, and tack this information on to a running list of people you’ve never met on the internet. Next, it’s your turn to invite people to send a modest gift or bottle of wine to a stranger along with their friends, family and contacts.

The cycle continues, and you can be left with buying and shipping gifts for unknown individuals, in hopes that the favor is reciprocated by receiving the promised number of gifts in return. Unfortunately, it doesn’t happen. Just like any other pyramid scheme, it relies on the recruitment of individuals and their participation to keep the scam afloat. Once people stop participating in the gift exchange, the gift supply stops as well, and leaves hundreds of disappointed people without their promised gifts.

It should be noted that pyramid schemes are illegal in the U.S. and Canada. The U.S. Postal Inspection Services explains that these gift exchanges are considered a form of gambling and that participants could be subject to penalties such as jail time, fines or a lawsuit for mail fraud.

The next time someone promises a bounty of gifts or cash by mail, email or social media, BBB recommends the following: 

Ignore it. Keep in mind that pyramid schemes are international. Chain letters involving money or valuable items are illegal. Stop and ask, is it worth breaking the law or risking the exposure of your personal information?

Report social media posts. If you receive an invitation to join a pyramid scheme disguised as a gift exchange on social media, report it. You can report these Facebook posts by clicking in the upper righthand corner and selecting “report post” or “report photo.”

Never give your personal information to strangers. This will open you up to identity theft and other scams.

Be wary of false claims. Some pyramid schemes try to win your confidence by claiming they’re legal and endorsed by the government. These imposter schemes are false as the government will never endorse illegal activity. No matter what they claim, pyramid schemes will not make you rich. You will receive little to no money back on your “investment” or gift exchange.

More information on scams is available by visiting BBB Scam Tips and become an advocate by reporting scams to BBB Scam Tracker.

 

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