Gifting Programs

I have written a lot of reviews over the last five years of running Mazu Publishing. Never in that time have I run across a bigger scam than gifting. What is gifting? That really depends on who you ask. The best way to understand gifting is to explain how it works.

It goes a little something like this:

People start a gifting club, in which people are going to make a lot of money recruiting other people to become members of the club that they just started.

While some of the clubs are cheap, most are not. Most have entries ranging from $2,000 to $10,000. The idea is that you pay your $2,000 (or whatever) and now you have the ability to recruit others for $2,000. Usually there are requirements like having to lose your first two members before you can recruit but that depends on how the gifting program you are in is set up.

Your $2,000 makes you a freshman but after the first two people you recruit you move up the list to the Sophomore. Your two get their two you move to Junior. Different clubs have different titles but I think you get the drift. Once you are at the top of the list (Senior) you get $16,000. Basically the eight freshmen coming in at the bottom. 8 X $2,000 = $16,000.

What do you get for your $2,000? Nothing more than membership in the club and the ability to recruit after you get your first two people to cough up $2,000.

If this sounds a lot like an illegal pyramid scheme, it is. But most people get around the fact that it is illegal because they tell people in the program that they have hired an attorney or they have found a loophole. These are “gifts” (hence the name) and there is only a $10,000 limit on gifts.

The real truth is: THEY ARE LYING.

Not a single one of these programs was or has ever been legal. Like most scams, they purely work on people’s greed. People are not giving this money as gifts. They are giving it because they are expecting that they are going to see a return on this. That is what makes it illegal.

One of the most enticing aspects is that it sucks so many people in. Think that you are immune? Think again. A few very good friends of mine got sucked into a gifting program by a friend that had just become a Senior in a program. His phone call stating that he just put in $2,000, made a few phone calls and got $16,000 (tax free) just a few weeks later was very powerful.

The problem is that all gifting programs (without exception) crash at some point. Maybe two weeks or two months after you have gotten in. Think that it won’t happen? It always does. If you are below a senior then you are probably not only out your $2,000 but you may have to pay back any friends that lost money as well. If you are a Senior then you are responsible for the entire board.

That can really create some problems when people that you hardly even know are calling you looking for their $2,000. Quite a few people that were stuck holding the bag when my friends program died had to take out loans to repay people. Some folks even moved and shut off their phone. It got real ugly fast.

My advice on gifting is very simple. Don’t Do It. Find something else to do with your time. Don’t let your greed cause problems if your life. Money should be created to enhance your life. Money should not ever cause problems with your existence.

P.S. If you are even thinking about joining a gifting program because this is different or that is different. Don’t. You are 100% wasting your time, flirting with the law (they are all illegal) and opening the flood gates to ruin some relationships with people that you know.

It happened with over 200 programs the FTC shut down last year from Seattle to Boston.

Matt Gagnon