Kansas City, MO - "Cash gifting" is making a strong showing on the internet. Involvement in what used to be called "gifting clubs," "networks," or "trees" quieted for a few years before finding a fresh internet audience in the last few years.
The scheme begins with a person asking friends (or strangers) to 'give' him money so they can participate in a miraculous money-making gift program. All that the new participants have to do is ask their friends for money. Those new participants ask their friends and so on. A percentage of the new recruits' money is always paid to the older members who did the earlier recruiting. There is no product, only a transfer of money. As long as new people sign up, new money comes in to pay off the older members. When fewer and fewer recruits sign up, the system collapses and the newer participants lose their money.
Because nothing is sold, some participants are under the false impression that it cannot lawfully be considered a pyramid scam. These people are incorrect and can be prosecuted, as demonstrated by former Missouri Attorney General Jay Nixon in 2000. He sued participants of a "cash gifting" network called Original Dinner Party. The judge ordered the defendants to pay $198,000 in restitution, penalties and costs. To leave nothing uncertain, Nixon stated, "This order from the court declaring this to be a pyramid serves as a clear and unambiguous notice that these schemes are illegal, and that anyone who participates in them is breaking the law." Earlier in the year, the Federal Trade Commission issued a consumer alert, defining these gift programs as pyramid scams. The year before, Montana made gifting circles illegal in the state.
With popular networking and video posting sites, these circles have found new volunteers, unaware of the scheme's nefarious origins. Those who find themselves involved in a cash gifting ring should inform their local Better Business Bureau or Attorney General's office immediately.
 Missouri Attorney General Press Release, Dec 17, 2000
 Federal Trade Commission: FTC Consumer Alert January 2000.
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