Thursday, April 9, 2009

Cash Gifting is Back. Don't Fall For It!

So, I'm getting ready to go to bed, getting one more check in on the email, stuff like that, and I'm listening to The POJ, and I hear a report on an old scheme designed to separate the desperate from their money.

It's "cash gifting". The report mentioned some staggering amonut of videos online, so I surfed on over to, and plugged in the words "Cash Gifting" – and the response said it was able to come up with just over twenty thousand videos about cash gifting.

And it's tempting to think that "well, yes, that's the sort of thing you expect to see in hard times", and write it off. As liberals and Official Smart People™, I'd like to point out that we can do better.

I've never been in a pyramid or cash gifting program. I don't know anyone who ever was, and I don't want to know anyone who ever does. So I speak as I find here. Here's what it's all about.

"Cash Gifting" is yet another case of old wine in new skins. Ever since the original chain letters (you know, the one where you send $5 to each of five names on a list and add your name to the bottom of a list and mail that off to five or so friends) and Make.Money.Fast, the chain letter-pyramid scheme has morphed just enough to seem legal and stay ahead of people who find out about it.

The current idea is a variation on an old theme. The way the schemes make the dodge look legit is to use the concept of a gift or a game to establish consent amongst participants and evade taxes (you can't tax a gift, after all, right?).

In the 70s and 80s, something called the "Airplane Game" was popular. This was a four-level tree, the top being the "Captain", the second level (2 participants) being the "co-pilots", the third level (4 participants) being the "Crew", and the fourth level (8 participants) were known as "passengers". When the passenger level filled out, each paying typically $1000 to get on board (that was usually it, but there were probably as many different costs-of-admission as there were schemes out there), all the money gets passed up the tree to the Captain, who "pilots off" and goes away with his gifted loot. The tree splits in two, the two "Co Pilots" become "Pilots", and each tree works to fill its passenger level.

It seems a reasonable plan. Since the money is gifts, they can't be taxed; since you only have to get 8 suckers on the bottom to complete the tree, it seems to be immune to that geometric progression that makes pyramid structures untenable because by the thirteenth generation you need over 13 Billion members to keep the pyramid going.

But when you think about it, the limited nature of the gifting tree doesn't prevent saturation, just forestalls it a bit. Because when that pilot flies off with his cash, the two airplanes now have to find sixteen people to let the new pilots take wing. And sixteen more for each if that pilot can take off. And so on.

It's not too long before enough burned people exist to bring the whole airline down.

Now, I told you all that to tell you this. Based on my hearing about the new programs on The POJ and my search on YouTube, it would seem gifting programs are back. These days, they're called The People's Program, and they call them a a gifting program. Video after video with similar claims, loaded with similarly-worded positive reviews, and links to similar websites, many of whom use identical graphics! Images of happy smug people fanning Benajmins in front of yo face and having their pictures on DVD cases promoting the program abound.

The catch these days to try to make it legal is that they try to leverage the searching power and self-selecting nature of internet users to promise you that only people looking to get into and profit from gifitng programs will see your appeal. This is supposed to keep it legit by not attracting people who don't know what it is you're talking about.

It will still get you in trouble. I've read a lot about these programs, and it seems that the "tax free gift" claim and the targeted interest concept has been used so much that the IRS sees it for what it is; an attempt to get money and evade paying taxes for it.

And even if you are daring and bold and desperate enough to give it a shot, consider that at least one estimate I've seen suggest that no matter how large the model becomes, 88% of participants will likely lose money.

The only way to be sure you're going to make money in a gifting scheme, really, is to start one. And then you're (sorry for the bluntness) just hoodwinking money away from other people who are just as desperate as you. Can you look yourself in the mirror and live with yourself? I know I couldn't.

Once again, I've never been in such a scheme (nothing magical about that, just my morbid interest in toxic social structures leading to voluminious reading, so I was luckily forewarned) and I never will be because it's logically and ethically suspect. And I've never known a person to be suckered by a Gifting Club, and I never want to know one.

But when I hear that there are tens of thousands of videos on YouTube with a high-tech version of the same old pyramid plan, I have to speak up.

And that's what I'm doing.

If you're tempted, don't do it. Please.

You only think you're badly off now. If you're lucky, you'll just lose your money.

Don't do it.

1 comment:

  1. Hi,

    Cash gifting opportunity is perfectly a legal entity. Cash gift is to gift property, cash and other assets and these programs are governed by rules and regulations established by laws.