Greg's Corner

Gifting club is just another name for pyramid scheme

By Greg Collier

Some of the oldest scams are the most effective ones. For example, the pyramid scheme is one that predates the internet and has been taking money from victims for decades. The only difference between then and today is the internet and social media have made it easy to find victims from all over.

The way a pyramid scheme works is the person on the top of the pyramid recruits people to invest in the scheme. Those recruits fill the next level of the pyramid than they have to recruit more people to fill the next level of the pyramid and so on. Once the pyramid is full, the person at the top gets all the investments from everyone beneath them on the pyramid. Then people gradually move upwards on the pyramid where they’ll eventually make it to the top and supposedly claim their windfall.

The problem with pyramid schemes is that only the people that get in first are the only ones who usually make money. The more the pyramid expands the more difficult it becomes to recruit new members leaving most participants at a loss.

Unfortunately, this has happened to a number of residents of Oregon. Calling itself a ‘gifting club’ a pyramid scheme in Oregon promised its victims a $9,000 payout for a $1,400 investment. Investors are then asked to recruit more people into the club. At least 20 Oregon residents have reported losing money to this alleged pyramid scheme. With everything being online, victims gave their money to the club through various payment apps like PayPal, Venmo, and Cash App.

If any kind of investment scheme requires you to recruit more people that is not a true investment plan but a pyramid scheme. Pyramid schemes are illegal in the US. If someone says that their plan isn’t a pyramid scheme because pyramid schemes are illegal, it’s almost definitely a pyramid scheme.