Fighting Fraud
By Better Business Bureau Serving Greater Cleveland
A “Secret Santa” with friends and family can be fun. A gift exchange among online friends you haven’t met, well, that’s a little different and carries a heftier consequence. These gift exchanges, while they look like innocent fun, are really pyramid schemes—and are considered illegal.
Last year, Better Business Bureau Serving Greater Cleveland® (BBB®) was alerted that local consumers were sharing holiday social media posts promoting these dangerous practices. Previously, BBB has seen gift exchanges targeting enthusiasts of wine and books. In addition to the usual suspects, this past year BBB also saw pyramid schemes targeting gifters of bourbon and dog toys.
These gift exchange scams always start with a convincing invitation, either by email or social media, to sign up for what seems like a great and fun program. All you must do is provide your name, address, and personal information of a few additional friends, and tack this information onto a list that’s already started of people you’ve never met on the internet. Next, it’s your turn to send an email or social media invitation to send a modest gift or bottle of wine to a stranger along with their friends, family, and contacts.
Just like any other pyramid scheme, these exchanges rely on the recruitment of individuals 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 or cash. There is also another layer of danger to participating in these schemes. When signing up, the alleged campaign organizer is asking for personal information such as a mailing address or an email. With just a few pieces of information, cyber thieves could expose you to future scams or commit identity theft.
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 holiday gift exchange scams are pyramid schemes and they are illegal in the US. The U.S. Postal Inspection Service 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.
- Report Social Media Posts – If you receive an invitation to join a pyramid scheme on social media, report it to Facebook by clicking in the upper right-hand corner and selecting “report post” or “report photo.”
- If It Sounds Too Good to Be True, It Probably Is – Whoever is at the bottom of a pyramid scheme, always loses. The odds are never in a consumer’s favor. Be wary of any false claims that you are guaranteed to receive a bounty of gifts in exchange for one bottle of bourbon or one $10 gift.
For more advice on staying safe online this holiday season, go to BBB.org/holiday. You can check out businesses, file a complaint, and submit and read customer reviews at bbb.org. Have additional questions? Reach out to your BBB at 216.241.7678 or [email protected]. Have a scam to report? Report it to BBB.org/ScamTracker.
