PIERRE, S.D. – Attorney General Larry Long today warned South Dakota consumers of several illegal money making schemes that are resurfacing across the state. Promoters of “gifting clubs” are reportedly using a sales pitch to persuade people into making a $2000 gift. Many involved in the clubs are also targeting their friends, neighbors and relatives with claims that a $2000 gift will quickly become a $16,000 reward.
“These gifting clubs are illegal and we take these complaints seriously,” said Long. “In 2001, our office prosecuted over 35 individuals from one community alone. Those participants who received money were ordered to make full restitution.”
The schemes are operating under several names, but the basic concept is the same. One consumer is asked to “give” money and then recruit others to do the same. In return, the consumer is promised a reward for those efforts. Promoters of the scheme claim that these gifts of cash are legal, but the problem occurs when the gift-givers expect money in return. Like most pyramids, gifting clubs must continually recruit new members and when this fails the pyramid collapses. Consumers with questions or concerns about pyramid schemes are encouraged to contact the Consumer Protection Division at 1-800-300-1986 or at http://atg.sd.gov/Consumers.aspx.