What is cash gifting?
April 28, 2008 9:42 AM   Subscribe

What are the specifics of "Cash Gifting"? All I can figure out is that it is a rip-off Ponzi scheme, but I can't find any specifics.

I saw some youtube videos about people getting boatloads of cash in the mail overnight, but some details are interesting. When I google it, I see only asshat promoters of it.

The specifics that I wonder about are the similar phrases and logistics of the videos. The basics are that people send large amounts of cash to each other. The cash comes in a UPS envelope, containing a magazine. Inside the magazine is an envelope with the recipient's name on it. Inside that envelope are some legal forms they refer to as "the gifting form" and a "non-compete", with a bunch of cash ($1500 or so).

So what are the mechanics of this scam and what other names might it go by? What are those legal forms, and what is the method that these people are using to make it not appear to be a straight pyramid scam?
posted by bensherman to Work & Money (7 answers total) 3 users marked this as a favorite
Here is a news story about it that describes it as a pyramid scheme as you suspect.
posted by TedW at 9:55 AM on April 28, 2008

When I google it, I see only asshat promoters of it.

Really :-)?
posted by dansdata at 10:05 AM on April 28, 2008

As far as I can tell, this is how most of them work:

One individual scammer pretends to be part of a large, successful, non-scam "Cash Gifting Network". They vaguely describe great their system is, and encourage victims to send them money as a gift to join. They make sure to explain that there is no direct payoff to the gift, but that by joining the network the victim will be able to make tons of money.

Once a victim sends them a gift, they tell the victim to ask other people for gifts. If the victim complains that they didn't get what they were promised, the scammer notes that the victim gave the money as a gift, and therefore have no legal recourse.
posted by burnmp3s at 10:08 AM on April 28, 2008 [1 favorite]

I'm not entirely sure, but here in the Caribbean, something seemingly similar happens.

A group gets together and agrees to take part in this savings/winning scheme, lets assume they get fifty people to participate. They sign something that seems to enforce the ongoing participation.

Every week, everyone puts in a fixed amount of money to the pot, a random prize draw is taken and that pot goes to one person in the group. Every week someone else wins (you can't win twice). Also, each week, the person in charge of the money usually gets some tip money from each of the participants for chasing people up etc. This goes on until everyone has won.

I have little idea why they do this, because you gain nothing in the long-term (you're out whatever your tip amount is times twelve). But it seems, some people find it a good way to get a lump sum of money to buy something big, rather then spending that pot amount on something smaller each month. Some of the banks make it difficult to even open a savings account, but from my experience, most people who participate have got bank accounts.

posted by Static Vagabond at 12:30 PM on April 28, 2008

What Static Vagabond is describing is a bit different; those entities are called Rotating Savings and Credit Associations (ROSCAs).

The "gifting" groups are just scams. I encountered one dressed up as "women helping women", but in the end anything like that is just a pyramid scheme that inevitably leads to a few lucky (and dishonest) individuals getting a big payday at the expense of others.
posted by allen8219 at 2:12 PM on April 28, 2008

It sounds like some of these scams could also fall under the heading of affinity fraud.
posted by TedW at 6:34 AM on April 29, 2008

Merlin Mann has a good take on these.
posted by mrbill at 7:25 PM on August 3, 2008 [1 favorite]

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