How To Identify A Pyramid Scheme

A "Secret Santa" with the team at the office, or with friends and family can be a great holiday activity. However, a gift exchange among online friends you haven’t met, now, that’s a little different and carries a heftier consequence. These gift exchanges, while they may look fun, are really pyramid schemes – and are considered illegal.

The “Secret Sister” gift exchange campaign became popular several years ago through Facebook posts promising participants would receive up to 36 gifts, in exchange for sending one gift.  Each holiday season, the scheme pops back up. There is a new version of this scam that revolves around exchanging bottles of wine; another suggests purchasing $10 gifts online. Have you ever seen a message saying "happy mail" or doing the exchange "for the good of the sisterhood."? During the 2022 holiday season, be aware of variations of this theme that may crop up on social media.

How to Identify a Pyramid Scheme

The scheme starts with a convincing invitation, either by social media or email to sign up for what seems like a great, fun program. The only thing you have to do is provide your name and address and the personal information of a few additional friends, and include 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.

A newer version on the idea asks you to give your e-transfer email and asks users to pick a name off of a list and send money to strangers, to "pay it forward." 

There was even another new one called "Secret Santa Dog" where you are asked to buy a $10 gift for a "secret dog." 

In all of these versions, you give away your personal information, and you’re left with buying and shipping gifts or money to unknown people, in hopes that the favour is reciprocated by receiving the promised number of gifts in return. Unfortunately, it doesn’t happen. Just like any other pyramid scheme, it relies on the recruitment of people 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 another layer of risk 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 load of gifts or cash by mail, email, or social media, BBB recommends the following: 

• Ignore, Ignore, Ignore. Pyramid Schemes are international. Chain letters involving money or valuable items and promising big returns are illegal. Think to yourself is it worth breaking the law? Report it instead to Canadian agencies or to the U.S. Postal Inspection Services.  
• Report social media posts. If you receive an invitation to join a pyramid scheme on social media, notify Facebook by clicking in the upper right-hand corner and selecting “report post” or “report photo.”
• Never give your personal information out. This will open you up to identity theft and other scams.
• Be wary of false claims. Some pyramid schemes try to win your confidence by claiming they’re legal and endorsed by the government. These schemes are false as the government will never endorse illegal activity. No matter what they claim, pyramid schemes will not make you a millionaire. You will receive little to no money back on your “investment” or gift exchange.

If you are interested in learning more about cybersecurity and how to identify a pyramid scheme schedule a cyber security assessment with one of our experienced technicians today!