Is it illegal to participate in a gifting circle?

Gifting clubs are illegal pyramid schemes where new club members typically give cash “gifts” to the highest ranking members. If you get more people to join, they promise you will rise to the highest level and receive a gift much larger than your original investment.

Is Sou Sou a scheme?

The scheme might be called a “blessing loom” or “sou-sou.” But the name doesn’t matter — it’s an illegal pyramid scheme that’s stealing credibility from legitimate sou-sous in which members aspire to help one another save for a specific purpose and nobody receives more money than they put in.

What is the circle pyramid scheme?

The most common form of the “Loom Circle” scheme asks people to pay $100 to put their name on the circle, with the founding member’s name in the center. Once the circle is full, the founder takes the $800 and then the other people start their own circles asking people to pay $100 to join.

Does gifting money get taxed?

Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions).

Is gifting people money illegal?

We can invite and communicate with people around the globe for almost zero cost with the internet, chat programs, forums, social networking, e-mail etc. So giving a gift of cash to someone, be it a friend, family member or a stranger is legal according to IRS code.

What is the $100 for $800?

It’s called “The Blessing Loom” and it’s a new twist on an old scam, the pyramid scheme. The scheme requires participants to pay $100 into an online payment system like PayPal, Venmo or Cash App. The person is promised an $800 return on their $100 investment.

How does $100 to $800 work?

Here’s how “The Blessing Loom” scheme works: You’ll see an octagon that must be filled with names of participants. You are told that if you pay $100 to get a spot, you recruit other people, and once your name makes it to the center of the octagon, you get $800.