With the rise in scams, particularly those online, the Delta Police Department, in conjunction with the Optimist, is running a monthly article to help residents stay safe from fraudsters.
While entirely illegal, pyramid schemes are alive and well in Canada, and you’ve probably heard about them. Sometimes called a gifting circle, other times called “the money cloud,” they promise a huge payout for a much smaller investment, which they often refer to as a “gift.”
Current versions of this scheme have participants paying or “gifting” $5,000 with the promise of quickly earning a $40,000 payout. However, this payout is entirely funded by eight new participants paying into the scheme, and if you do the math, it’s clear the scheme will quickly run out of new participants, leaving many victims in its wake.
This is precisely why these schemes are criminalized in Section 206(1)(e) of the Criminal Code of Canada. It specifically defines that everyone who “conducts, manages or is a party to any scheme” is guilty of the offence. Pay attention to the word “party” as it simply means being involved. Thus, being involved in a pyramid scheme is a criminal offence.
Take note of the following warning signs to avoid becoming involved and running afoul of the law:
* The organizers call their scheme “Women Helping Women” or “Women Gifting Women.”
* The organizers insist on payment in cash.
* The organizers make you use aliases or code names.
* The organizers eagerly tell you they’ve checked with police and that the scheme is legal.
* On paying into the scheme, you receive a small gift card in return (done to try and legitimize the plan, but it’s still illegal).
Turning a blind eye to this ongoing issue will only leave more vulnerable victims behind. If you have any doubts at all, or if you’re aware of such an ongoing scheme, contact your local police department.
On a final note, it needs to be noted these schemes have no relation to the organization Women Helping Women South Delta, a group of local women who selflessly collect donated goods and provide them to those in need.
