BBB Tip of the Week: ‘Secret Sister’ gift-exchange scam
The Better Business Bureau is reminding consumers that the online “Secret Sister” gift exchange and similar invitations are illegal and should be ignored.
The campaign, which first became big in 2015, has again been circulating on social media sites, Facebook. The post claims participants will receive up to 36 gifts in exchange for sending one gift valued at $10. Users are encouraged to invite others to participate in the holiday gift exchange, where they will receive information on where to mail gifts.
But there is one big problem with gift chains like “Secret Sister” – they are pyramid schemes. The U.S. Postal Inspection Services says gift exchanges are illegal gambling and participants could be subject to penalties for mail fraud. Pyramid schemes are illegal, either by mail or on social media, if money or other items of value are requested with assurance of a sizable return for those who participate. The laws are similar in Canada, where pyramid schemes also are illegal.
How the scheme works
If a consumer purchases one gift for a stranger, she will receive as many as 36 gifts in return. This type of gift exchange may seem reasonable enough in theory: six friends invite six more friends, who all send gifts to the participant in spot 1 before that person’s named is removed. This process repeats itself with the participant in spot 2, and so on. Of course, starting this gift exchange comes with a catch – you need to disclose your personal information, such as your home address.
If you receive a chain letter by mail, email or social media, especially one that involves money or gifts, ignore it. Report the post to Facebook by clicking on the three little dots in the upper-right corner of the post.
The U.S. Postal Service placed a notice on its Facebook page that details the way the pyramid scheme is laid out and executed. This included information on how this scam was mathematically possible, and how many people and levels of the scheme would be needed to allow for some to benefit. Also, it notes, this scheme violates the Lottery Statute (Title 19, United States Code, Section 1302) it contains the three elements of a lottery:
Prize (expectation of monetary or other gain from participation in the pyramid);
Chance (the monetary return you may receive from your participation is entirely up to chance, that is, dependent on the efforts of those below you in the pyramid),
Consideration (the price of your gift to join the pyramid).
Pyramid schemes carry hefty penalties and, if convicted, a person you can be fined and imprisoned.
For more information on scams, check out BBB Scam Tips (BBB.org/ScamTips). Report scams to BBB Scam Tracker (BBB.org/ScamTracker).