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BBB warning consumers about social media gift exchanges — many are illegal pyramid schemes

A “Secret Santa” around the office, or with friends and family can be fun. A gift exchange among online friends you haven’t met, well, that’s a little different and carries a heftier consequence. These gift exchanges, while they sound like innocent fun, are really pyramid schemes – and are considered illegal.

The “Secret Sister” gift exchange campaign quickly 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. A newer version of this scam revolves around exchanging bottles of wine; another suggests purchasing $10 gifts online. You might see references to receiving “happy mail” or doing the exchange “for the good of the sisterhood.”

BBB warns the 2022 holiday season could have another variation of this theme that may crop up on social media.

The scheme starts with a convincing invitation, either by email or social media to sign up for what seems like a great, fun program. The only thing to do is provide your own name, address, along with a few other friends, and tack 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.

The most recent twist on the idea asks people to 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 twist called “Secret Santa Dog” where participants were asked to buy a $10 gift for a “secret dog.”

In all of these versions, personal information is requested, and participants are left with buying and shipping gifts or money to unknown individuals, in hopes that the favor 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 individuals 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.

It should be noted that pyramid schemes are illegal in the US and Canada. The U.S. Postal Inspection Services explains that these gift exchanges are considered a form of gambling and that participants could be subject to penalties such as jail time, fines, or a lawsuit for mail fraud.

There is another layer of danger 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 bounty of gifts or cash by mail, email, or social media, BBB recommends the following:

• Ignore it! Keep in mind that pyramid schemes are international. Chain letters involving money or valuable items and promising big returns are illegal. Stop and ask, is it worth breaking the law? Report it instead to the U.S. Postal Inspection Services.

• Report social media posts. If you receive an invitation to join a pyramid scheme on social media, report it to Facebook by clicking in the upper right-hand corner and selecting “report post” or “report photo.”

• Never give your personal information to strangers. 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 imposter schemes are false as the government will never endorse illegal activity. No matter what they claim, pyramid schemes will not make you rich. You will receive little to no money back on your “investment” or gift exchange.

More information on scams is available by visiting the BBB scam news feed. Report scams to BBB Scam Tracker.

BBB Cincinnati

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