The ‘secret sister’ gift exchange on Facebook is actually an illegal pyramid scheme
There’s a “secret sister” gift exchange circulating on Facebook, that promises that participants will receive up to 36 gifts while only giving one of their own.
It sounds too good to be true, and (unsurprisingly!) it is. And it’s not just a dubious idea — it’s actually an illegal pyramid scheme.
It has been circulating in some form since at least 2015, and has had a resurgence in the run up to the holiday season, prompting at least one local police force to issue a fresh warning. So how does it work?
It spreads via a Facebook post advertising the exchange (36 gifts in exchange for 1!) and asking six people to join in. When someone does so, they’re sent a message asking them to: 1) Send a gift worth $10 to the “secret sister #1,” the first name on a list they’re given, 2) Move the person currently in second place on that list — the person who made the post they responded to — into first place, 3) Put their own name in second place. 4) Re-post the public Facebook post to their own profile, and recruit six more people to do the same thing they just did.
If there’s 100% recruitment and participation, then the poster receives 36 gifts, as each of the six people they recruited recruits six more people who sends them gifts.
But it only works up to a point. It’s a pyramid scheme, reliant on a constant inflow of new members to pay old members their promised gifts. This means the people at the bottom have to lose out eventually — as there’s only a finite number of people in the world.
As such, it’s not just inadvisable to participate, it’s outright illegal.
Earlier this week, the Wauwatosa Police Department in Wisconsin posted a warning on Facebook about the scam, and linking to an article from the US Better Business Bureau (BBB) about the problems with “secret sister” schemes.
“The U.S. Postal Inspection Services says that gift exchanges are illegal gambling and that participants could be subject to penalties for mail fraud,” the BBB wrote.
“Pyramid schemes are illegal, either by mail or on social media, if money or other items of value are requested with assurance of a sizeable return for those who participate.”