How much (cash) are your friends worth to you? Well, being that you and I are friends, I know, you’re in as much financial trouble as I am. So I’m going to let you in on my secret gifting circle plan that will help you prosper forever. Stop…right there. If anyone, even another friend, asks you, “how much your friends are worth,” in a jolly salesman type voice, a red light should turn on in your head.
Here’s why.
You may have missed it when he coughed during the “gifting circle” part. A gifting circle isn’t a circle at all. It’s a pyramid, or even a train, but certainly not a circle. In fact, a gifting circle is far more dangerous than any MLM pyramid scheme ever was. But members, even so called friends, will try to tell you why gifting circles aren’t pyramids, and why they are better than MLM.
Their reasons might sound something like this.
1. The top of a pyramid always comes to a point. But in a gifting circle, the pyramid is turned upside down, so the person at the bottom point gets paid.
2. In pyramid schemes, the person at the top always gets paid the most. In a gifting circle the person at the bottom point is always rotating places with other people, so everyone gets paid.
3. With MLM pyramids you have to buy and sell products. With gifting circles, no products are involved.
4. With MLM pyramids, you have to build a business. With gifting circles you deal only with a circle of “friends.”
Did you know, that by law, you can gift people over $10,000 and they will never have to pay taxes on that money? Gifting circles thrive off of this law. In fact a hundred people can all gift one person over $10,000 each, and that person will never have to pay taxes on it.
These usually work out where a friend convinces someone to join, by signing a contract, confirming that the entry fee is indeed a gift. Being that the money is now contractually gifted, it is not subject to taxation, and cannot be refunded.
In gifting circles the entry fee will often range anywhere from $100 to $5000. In all instances, members are all but promised they will make grand profits if they join. Individual gifting circles often target women. In fact, they are often started by women, and advertise to members that they are “women helping women” groups.
Gifting circles can start with relatively no money at all. Two people can begin it, by each convincing two friends to join for $100. Then those four convince two people each. Pretty soon you have eight women, six invitees, all of who are friends of someone, even though they may not all know each other.
Seems pretty good, right? It’s a close nit group of people trying to help each other get ahead. There’s only one problem. Because the pyramid is upside down, and there are no products involved, gifting circles are more dependent on growth than MLM schemes are.
There are many reasons why gifting circles aren’t circles, as I mentioned in the beginning. In gifting circles, no one actually rotates. Instead, the growth of one pyramid can only reach a certain point. Because gifting circles are illegal in the US, if a certain circle is not exposed before it reaches a certain size, it can multiply into one, two, three, or more pyramids. When you put all of those pyramids together, you have one supreme person at the bottom.
Though many members of a gifting circle will deny it, MLM pyramids multiply exactly the same way. In MLM, just as in gifting circles, each individual person has the ability to form, and be the head of, their own pyramid. As long as their respective members keep up pace, they will always follow the people ahead of them, while at the same time continue to get paid by the people below them. But no matter how many pyramids there are, they are always put together under one supreme point at either the top or bottom
But why are gifting circles illegal, while MLM schemes aren’t?
This stems from the fact that there is no product involved with the gifting process. Calling them a circle would denote that the process goes on forever. Thus participants can prosper forever, as if from a residual income. But with no product to hold everything together, these gifting trains, or trails, were made to end.
Often times when the so-called “circle” gets large enough, they will stop being about the whole “women helping women” deal. That tune will miraculously change. Men will get just as involved. Such a change can only spell out the dishonesty in the whole process.
The fees to continue can reach over $5000. If the entry fee is that high at the beginning, expect the leaders to bail on the whole sha-bang right away. Many gifting circles will freakishly stop on a dime once several individuals are paying out $5000 to continue in the game.
It will fall apart, because certain leaders will excuse themselves from the fold.
At this point, something over ten people will be wondering where the leaders disappeared. Maybe 50 people below them will wonder why everything has suddenly stopped. No one will be able to contact the people who have all the answers, but everyone will begin to feel a certain sickness in the darkest pit of their stomachs.
It’s no wonder why gifting circles are known to be notorious for changing their secret coded names. Usually they will all have a name that only members know. As mentioned before, members must always be “invited,” like a vampire, to “gift” their first $100 entry. Now doesn’t that just sound bogus?
You have to be invited to gift $100? Of course it’s illegal! There is a reason you must be invited. Only a friend, whom you obviously trust, is going to invite you. Therefore you won’t suspect something fishy until it’s too late. It isn’t like MLM, in which case people are fishing for anyone who will join.
You would think that under these circumstances most gifting circles fall apart real fast. You would think the leaders run off with maybe $40,000 to $100,000 every time they have the chance. But it isn’t always the case.
Some of them are far sneakier!
Some of these predators are in for a longer haul. These will even build websites, claiming the government recognizes them as legal establishments, largely because of this high-tech Geocites websites. It’s only a ploy to leech more money out of people. Often they claim that to remain legal, they have to maintain the website that shows all the activity of the gifting circle.
Now here’s the real kicker.
Members must pay a fee, sometimes, $20 a month to maintain their own section of the website. This way they can see their status in the gifting circle, but also keep the business completely legal!
In that case, the mafia should build a website, so they can operate in plain sight on a legal basis.
When websites are involved, in these gifting circles, there can be hundreds of people paying $20 a month to maintain a free Geocites page. It’s ridiculous, and just a way for people to take advantage of others who are obviously desperate, and going through hard times to begin with.
Before joining, when your $100 entry gift is slipping out of your hands, “friends” might all but guarantee you will make money. After all, you only have to get two other friends to join. How hard could it be? In all likelihood, someone will not be able to convince anyone to join. That person will likely get angry, and demand the $100 entry gift back, friend or no friend.
People have gone to court over these things before. I’ve read articles in Reader’s Digest. Often when you turn on talk shows, you can find information about gifting circles. The articles, and shows, often focus on the people who have been cheated out of large amounts of money.
Chances are, if a friend of yours approaches you to join one of these gifting circles, it is completely out of ignorance. Although, I have personally known people calling themselves “friends” who have lied to, cheated, and stolen from others with these gifting circle scams. So, the next time you wonder how much your friends are worth, be mindful of the person enquiring.
