Pyramid scheme: Gifting Circles- Stay away from these!

Yes, stay away from these. They are pyramid schemes.
Do not succumb to these.
They are a fraud.
They are very risky.
Expect to lose your money.
They are cloaked with misinformation.
I cannot express my concern deeply enough about these.

See (watch video):
https://www.stuff.co.nz/business/94740146/commerce-commission-warns-against-gifting-circle-pyramid-scheme

See: lightworkersworld.com – The Top 10 Reasons NOT to Join a Women’s Gifting Circle | Lightworkersworld
and http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11468106

Also see: http://www.crimes-of-persuasion.com/Crimes/InPerson/MajorPerson/pyramid_clubs.htm

The scheme may not work exactly as I have described below but the info should show why you should not “invest” in these schemes.

You need to remember that very dollar earned from these schemes comes from someone else.

For someone to get eight times their initial “investment/ Gift”, fourteen more people must join. Another 14 must join for each person in the bottom row to get their return (8x). See the picture below. Clearly this cannot be maintained.

Person 1 gets their money from all the people in the bottom row (8-15). Note: when person 1 gets money, this person is removed from the list (and the new “investor’s” name gets added to the bottom of the new list). There are of course many lists in existence at any time.

If the initial amount is $5000, this could get them $40,000 (8x) from the 8 people in the bottom row (8-15).

If the initial amount is $7000 then the amount could be $56,000 (8x).

Also note that the next level down will have 16 people. This is one more than the total number of people already in the scheme (15) in the diagram. Similarly for the next level after that etc. As each layer (level) is added, the total number of people involved is one more than the total number of people already in the scheme previously (one level up).

There is a variation of the above where you keep half of the money each new person “invests” with the other half going to the person at the top. This will of course involve an extra level at the bottom (16 people at the bottom level) to get the claimed “profit”. This means that each person gets their money back once they invite two more people (half their money back when they invite each new “investor”).

In the 1970s (or a bit earlier) their was a similar scheme called “The Circle of Gold”. This had 12 levels! This scheme was a chain letter scheme- the Internet did not exist then!

Daily prompts:
Circle
Expect
Risky
Fraud
Express
Cloaked
Succumb