Gifting Circles now illegal

July 16, 2017

Categories: Skepticism , Tags: Scam, Scam

Women's gifting circles have made the news again this week as they are now officially considered a pyramid scheme by the Commerce Commission.

A Nelson GP, Fran Halford, has spoken out (opens new window) about her own experience last year.

To join the group, a one-off payment of around $7,000 is required. This payment is made to someone higher up the pyramid. Members then have to sign other people up below them, which allows them to move up from being a "seed" to a "sapling", a "blossom" and then finally a "lotus". At the level of lotus, they will receive a $56,000 payout.

Women are told not to talk to others about the group, outside of people they're trying to recruit - and to definitely not tell any men about it. They're also advised not to read up about the group on the internet.

Richie Hutton of the Commerce Commission says "If you are approached to join a circle, don't. If you are already in a circle, you should leave and not encourage anyone else to join."

I think this is very good advice. It can be very tempting to stay in, with the hope of being able to leave after you've received your windfall from the scheme. However, that windfall is unlikely to happen unless you put a lot of effort into getting people you know stuck in the same position you are. So your choices are either to lose out, or to win by making your friends and colleagues lose out. It's better to lose out yourself and accept the consequences of having joined a group without having researched it properly first, than to cause misery to others.

To reinforce this, there is now the potential of a fine of up to $600,000 for anyone who tries to sign someone up to one of these groups.