Messages are spreading across Facebook that claim you can participate in an “exchange program” where you can receive 36 books/bottles of wine/$10 gift coupons/$10 gift in exchange for sending only one book/bottle of wine/$10 gift coupon/$10 gift.
[UPDATE: We’ve written a separate article addressing common feedback, complaints and misconceptions about Pyramid Schemes here which we also recommend reading.]
Such messages are examples of classic pyramid schemes that have been adapted to suit social media. Older variants have previously circulated via email and before that, through the post. In one popular example, such messages will ask you to purchase a single book, send it to a specific person and then pass the message on to 6 of your own friends, where eventually you will receive 36 books in return for your initial purchase. However, at least one other variant replaces books with gifts of a $10 value and calls itself the secret sister gift exchange. Examples include –
I am participating in a book exchange for my kids, so I am looking for 6 mums, mums to be, grandmas, or anyone interested in the book exchange that will actually participate and follow through. Here is how we play: you must purchase and mail ONE book to a child and then your child receives 36 books in return (if all goes well and everyone follows through). You can do this in 10 minutes or less if you order the book through Amazon, alternatively pick up a good quality charity buy. Just think of how much fun checking the mail will be for your child with lots of books coming! Let me know if you are interested, and I’ll pm you the instructions…it’s super simple! First 6 to commit will be in!
and
Welcome to our secret sister gift exchange! Here’s how it works:
1) Send one gift value at least $10 to secret sister #1 below.
2) Remove secret sister’s name from #1; then move secret sister #2 to that spot.
3) Add your name to #2 with your info.
4) Then send this info to 6 other ladies with the updated name info
5) Copy the secret sister request that I posted on my wall, to your own wall. If you cannot complete this within 1 week please notify me, as it isn’t fair to the ladies who have participated and are waiting for their own gifts to arrive. You might want to order directly from a web-based service (Amazon, or any other online shop) which saves a trip to the post office. Soon you should receive 36 gifts! What a deal, 36 gifts for giving just one! Be sure to include some information about yourself … some of your favorites. Seldom does anyone drop out because it’s so much fun to send a gift to someone you may or may not know … and of course it’s fun to receive. You should begin receiving gifts in about 2 weeks if you get your letters out to your 6 people right away.
They’re pyramid schemes. Pyramid schemes are unsustainable (and usually illegal) systems whereby you purchase a single item for a person “above” you in the pyramid (possibly the person who referred you or the person who referred the person you referred you) and in return you receive gifts from others that you refer (or who they subsequently refer.)
Most of the examples running across Facebook are ‘two deep’ pyramid schemes, meaning you send a gift to the person two levels above you in the pyramid (the person who referred the person who referred you) and the people sending you gifts are two levels below you (the people referred by the people you referred.) This means if you recruit 6 people, every person they recruit (i.e. 36 people) will send you a gift.
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Of course this system is unsustainable, since eventually the system will run out of people who are interested in participating, and the system simply collapses, with the majority of people at the bottom of the pyramid losing out. Not only is it unsustainable, it is also probably illegal to operate and participate in in most countries. The Federal Trade Commission outlines what pyramid schemes are here and the U.S. Postal Inspection Service outlined pyramid schemes when they were conducted via mail years ago. The Better Business Bureau warns against pyramid schemes on social media here.
It is also worth noting that most people simply do not comply with the schemes instructions or lose interest, making it very unlikely that anyone participating will actually get the promised returns.
Pyramid schemes take on various forms and have been around for years, long before the Internet. They have operated via postal mail, and popularly through chain email. Often they simply ask people to send cash, though variants like these replace cash with other goods like gift vouchers or books. In either case the system is just as unsustainable and illegal.
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Many pyramid schemes attempt to disguise themselves as such by purporting to offer a product or service, though in illegal operations, such a product is merely a façade used to disguise a pyramid scheme. Remember – if any system simply cannot sustain itself without the constant recruitment of new members, then it is illegal.
Thus we do not recommend participating in any scheme floating around Facebook that uses this modus operandi.
UPDATE: Following up from this article we’ve written another article that addresses common complaints and misconceptions (that we received) about these types of pyramid schemes which we recommend reading here.