Are Gifting Clubs Really Pyramid Schemes

Better Business Bureaus are again detecting a rise in gifting clubs — groups that manage to convince newcomers that they will receive thousands of dollars if they make a “gift” to participate in a private, invitation-only network.

The clubs go by various names. In prior years, groups were organized under the names of The Airplane, Friends Helping Friends, The Pit Stop and the Original Dinner Club. Today’s groups methods are similar. The groups target those with an affinity — such as women’s clubs, community groups, church congregations, social clubs and special interest groups. Participants are invited to attend private meetings.

While invitees initially may not be asked to pay any money up-front, eventually participants are asked to contribute $500-$5,000.

The philosophy of charitable giving is often used to draw people in. Organizers may cloak their schemes in religious terms, using the love of God as a sales pitch or employing feel-good words like renewal celebrations. Some clubs are touted as fundraisers for a good cause or as an empowerment program to help people help themselves. However, gifting clubs are nothing more than pyramid schemes that separate people from their money.

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