'Gifting circle' a scam

It looks like there's a new scam in town.

Last year in Coquitlam, RCMP issued an alert about the "gifting pyramid scheme".

"We are finding people getting caught up in this pyramid scheme who have no idea that it’s illegal," said Cpl. Michael McLaughlin with the Coquitlam RCMP. "One of our Coquitlam RCMP ECU investigators was even asked if she wanted to join. The sad truth is that pyramid schemes always fall apart and the people at the bottom, your friends and family, lose their money."  

The gifting pyramid scheme usually targets groups of people who are convinced to recruit their friends or acquaintances.

New members have to pay their recruiter a $5,000 "gift" to join. In turn, each member is expected to recruit eight new people so everyone can end up with $40,000.

Recruiters try to legitimize the buy-in payment by calling it a "birthday gift," a "transaction," or a "gifting circle" and insist the payment is not taxable or illegal because it’s only a gift.

A Kelowna woman who wishes to remain anonymous told Castanet one of her friends recently bought in for $5,000 at a meeting in Kelowna.

Now she's waiting for her so-called "birthday," when she has been told she will receive her $40,000 windfall. But that can't happen until she has recruited other unsuspecting individuals  and convinced them to contribute $5,000.

Otherwise, known as a pyramid scheme.

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