I write a lot about multi-level marketing companies on this blog, and their similarities to illegal pyramid schemes.
Most MLM companies exploit legal loopholes in order to get away with functioning as a pyramid scheme without actually being classified as one by the FTC.
However, there are some outright pyramid schemes that have been classified as such, and yet they still continue to rear their ugly heads again and again.
The scheme of today’s post is an extra special one, because it’s a Christmas scam. That’s right – a pyramid scheme that promises an abundance of Christmas gifts in exchange for just one small purchase.
My friends, I present to you, the Secret Sister Gift Exchange, otherwise known as the Secret Sister Pyramid Scheme.
The Secret Sister Pyramid Scheme – A Christmas Scam
What is the Secret Sister Gift Exchange?
The Secret Sister Gift Exchange is a kind of chain letter gift exchange that is primarily spread through Facebook. It originated in around 2015, and it pops up again without fail every festive season to sucker in new, unsuspecting players.
The way that it works is as follows: you are told to buy one gift, with a value of around $10. You send that gift to the person at the top of a list, and then you recruit 6 of your friends into the exchange, who must also buy a gift for the person at the top spot.
The person at the top of the list is then removed, having received a tonne of gifts, and the person at #2 moves up to #1 and receives their gifts, and so on.
The idea is that everybody who joins must only purchase one gift, but due to the number of people being recruited, everyone will get up to 36 gifts in return.
This sounds great, right?
Not so fast.
I actually saw a book version of this circulating a few years ago, where you were encouraged to send one book to somebody and would supposedly receive 36 books in return. Knowing nothing about this type of thing back then, I was tempted to sign up, but luckily I smelled a rat and realised it was too good to be true,
You don’t have to be a genius to see that there is something amiss here, and that it is impossible for everybody to receive 36 gifts while only buying one.
Mathematically, it just doesn’t make any sense.
If you are receiving more gifts than you send, somebody has to be losing out.
The Secret Sister Pyramid Scheme
The Better Business Bureau themselves have stated that the Secret Sister Gift Exchange is an illegal pyramid scheme, where the vast majority of participants end up never receiving any gifts.
As with any other pyramid scheme, the Secret Sister scam doesn’t take long to fall apart.
If everybody recruited 6 people, then it wouldn’t be long before there were hundreds of thousands of people participating. As the Wikipedia diagram below shows, pyramid schemes are impossible to maintain because by the time you reach a certain number of levels, you have recruited more than the entire world’s population!
If every member of the Secret Sister Gift Exchange recruited 6 people, it would only take 11 levels before you would need almost TWICE the population of the entire planet!
So, the Secret Sister Gift Exchange is a pyramid scheme…but what’s the problem?
So, you spent $10 on a gift and never received anything back.
It’s not the end of the world right? And if there’s a chance of getting 36 gifts back in return, you may as well go for it…right?
While losing $10 likely won’t break the bank, chain letters that require you to spend money in order to participate while promising a substantial return are illegal.
The U.S. Postal Inspection Service says that the Secret Sister Gift Exchange is considered a form of gambling, and people who participate could face penalties like jail time, fines or even a lawsuit.
And that’s not all.
On her blog, Multi Level Mess points out that not only are you committing a crime by participating in the Secret Sister Gift Exchange, but you are also leaving yourself vulnerable to identity thieves and predators.
By taking part in the Secret Sister pyramid scheme, you are handing over personal information such as your full name, address and contact details.
Fraudsters know this all too well, and so many people will join these schemes purely to obtain valuable information which they can use for their own nefarious purposes later down the line.
The Secret Sister Pyramid Scheme | Final Thoughts
As the saying goes, ‘if something sounds too good to be true, it probably is,’ and this is no different for the Secret Sister pyramid scheme.
The majority of people who participate will never receive any gifts, and before long, the entire thing will collapse because there simply are not enough people in the world to sustain it.
It may seem like one of the less dangerous pyramid schemes out there, and in a way it is, but what I personally detest about the Secret Sister scam is the fact that it prays on people who want to spread Christmas cheer and enjoy some gifts during the festive season.
It’s been a rough couple of years for everybody, meaning that people may be more susceptible than ever to scams like this, and so if you see your Facebook friends sharing an invite to the Secret Sister Gift Exchange, reach out to them and let them know that it’s a scam before reporting the post to Facebook.
If you want to embrace the gift-giving spirit this Christmas, there are several ways that you can do it.
– Arrange a traditional Secret Santa exchange with your friends or colleagues, where everyone buys 1 gift and receives 1 gift.
– Take part in the annual Reddit Secret Santa, where you buy and receive a gift from a stranger.
– Take part in something like Operation Christmas Child, where you fill a shoebox with small gifts for a child in need (you can also do this online for $25).
There are many more gift exchanges online, no matter where you live or what your interests are. However, the Secret Sister scam is not one that you should take part in. It’s dishonest, it’s unethical and it’s illegal.
Remember to be vigilant on social media this Christmas and don’t fall prey to predatory scams like this one! If you know of any other scams that you would like me to look into (particularly pyramid schemes), drop me a comment below and let me know!
Until next time,
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