Prior to the Internet, Cash Gifting schemes were prevalent and known as the chain letter scam. You received a letter from a person asking you to send a specific dollar amount to the people named on the list. Then you were to remove the first name on the list, move everyone else up one spot and add your name in the bottom spot and then mail your list to 200-500 people. Then within weeks you were to receive money flowing into your mailbox from all those who also did what you did.
Now instead of the mailbox this chain letter scam has moved to the Internet via your Email inbox, or they have a membership website. While some programs are still called cash gifting, now they are calling themselves a private club, gifting club, or gifting circle. It makes no difference what they call it, they are all illegal. They are illegal in all 50 states and in almost every westernized country in the world.
In order to try and convince you that the particular cash gifting scheme you are being asked to participate in is legal, they have you sign a Non-Disclosure Statement, a Non-Solicitation Statement, or a Gifting Statement. In these documents they will have a statement that you are not seeking an investment opportunity, you have no expectation of a return for your ‘gift,” you are not being solicited in any way, your gift is not an investment, you are voluntarily participating, and your participation in and the offering of your gift is believed to be totally legal. Now there are many more particulars in either of these two documents, but these are the ones that are meant to convince you cash gifting is legal. To further the illusion of legality, most gifting programs refer to the IRS Tax Code, Title 26, Sections 2501-2104 and 2511 which state the gifting rules of the IRS. This rule applies to estate gifting, and allows each individual to “gift” up to $13,000 per person or $26,000 for a married couple to anyone they wish to “gift.” What they fail to tell you is that the section of the IRS Code they lovingly quote as making their gifting scheme legal also has this one sentence that is omitted by the cash gifters which clearly makes cash gifting illegal, and it is this sentence: “YOUR GIFTS MUST BE GIVEN WITH ABOSLUTELY NO EXPECTATION OF RECEIVING ANYTHING IN RETURN FOR YOU GIFT.”
The whole purpose of the cash gifting scheme is based on the expectation of your receiving tens of hundreds more back in return than your gift you sent. Otherwise you wouldn’t be participating.
What should be another reason for you to understand why cash gifting is illegal is this: After telling you how legal cash gifting is, they then explain to you how to send your gift without the authorities knowing you are sending cash through the mail which is illegal. It makes no difference if it is the US Postal Service, FedEx, UPS, DHL, or any other overnight delivery service, it is illegal to send cash.
Another one of the lies told by the cash gifter is that your gift is tax-deductible and not subject to taxes. The moment you get something back in return for your gift, it is no longer a gift and the money is taxable. Which means the IRS can come after you for filing a false tax return.
What the promoters of these cash gifting schemes do not tell you is that they and all their friends and family have the top 100 positions in the cash gifting pyramid. What this means is that you are lucky to even get your initial amount you gifted back, and you certainly are not going to reap the reward of hundreds if not thousands of dollars they promise you for participating. This also makes cash gifting an illegal pyramid scheme, and is what we call a two-for: two illegal programs in one.
Many of the cash gifting schemes quote Scripture to try and convince you their activity is legal. The biggest target for cash gifting schemes are Christians, the church and their congregants. In fact Christians are one of the three top affinity groups that are specifically being targeted today. The other two are Seniors and the Jewish Community.
The problem with cash gifting schemes are they are not around long enough for law enforcement to take any action against them. Since everything is done in cash, there isn’t any money to be returned to the victims when the perpetrators are caught and brought to justice. Also the perpetrators running these programs use fake names, addresses, phone numbers (throw-away cell phones), so finding them is difficult. In the last 11 years, to our knowledge there have only been four persons who were running an illegal cash gifting scheme who were caught, convicted and sent to prison. The hundreds of cash gifting schemes just disappeared without a trace.
Every cash gifting scheme fails all on its own because they cannot sustain themselves. Once the program has crashed, the people behind it will usually wait about six to nine months and then start a whole new cash gifting scheme with a new name and new contact info, but it is just the same people who scammed you the first time.
Here are just a few of the names these illegal cash gifting schemes have used:
The Peoples Program
Freedom Ring America
Wealth Thru Generosity
Give To Others
The Miracle Network
Abundance To All
Helping All Daily
1 Day Gifted
My Gifts 2U
Our Daily Bread
Xpress Daily Cash
The Ten Dollar Program
You Get Paid Fast
$400 Per Week For One Month Club
Most of the state Attorneys General have warnings on their websites about the illegality of cash gifting in their respective state. The FTC also has warnings on its website about the illegality of cash gifting schemes.