BBB outlines new twist on pyramid schemes

Do you have a friend or family member who wants to "let you in on the ground floor" of a fantastic business opportunity?

Think twice if that opportunity involves making an initial "gift."

The Better Business Bureau reports that pyramid schemes are resurfacing with a new twist. The latest versions are called gifting, or giving, clubs.

To join the club, consumers are asked to make a contribution to the highest ranking members, who have titles such as captain or chairperson.

Gifting club promoters usually target closely knit social and religious organizations, encouraging participants to bring in friends and relatives to help them assume a higher position in the ranks. In reality, the clubs are nothing more than illegal pyramid schemes.

The problem is, like most pyramid schemes, illegal gifting clubs must continually recruit ever-increasing numbers of members to survive. When the supply of people runs out, the pyramid collapses, and most people at the bottom of the pyramid lose their money.

If you're approached about joining a club but you are not sure if it is an illegal gifting club, the Better Business Bureau and Federal Trade Commission recommend that you:

Consider that a legitimate gift has no strings attached and is not an "investment."

Avoid being misled into thinking a gifting club is legitimate because the ads say that members consider their payments a gift and expect nothing in return. This is an attempt to make an illegal transaction look legal.

Be wary of success stories or testimonials of tremendous payoffs. Very few members of gifting clubs or pyramid schemes ever receive any money.

Take your time. Don't buckle under to a high-pressure sales pitch that requires you to join immediately or risk losing out on the opportunity.

For more information on pyramid schemes, visit the Better Business Bureau's Web site at

www.bbb.org/library/tippyra.asp.