The Better Business Bureau is warning consumers about a scam circulating on social media that promises a big payoff for participating in a “Secret Sister” gift exchange among online friends you haven’t met. While they look like innocent fun, they are considered to be pyramid schemes, which are illegal in the U.S. and Canada. According to the U.S. Postal Inspection Service’s gambling and pyramid scheme laws, participants could be subject to penalties for mail fraud. Gift exchanges grow in popularity during the holiday season, and the BBB advises consumers to use caution.

The scheme starts with a convincing invitation, either by email or social media. Participants must then add their names, addresses and some of their friends’ contact information to a list, which may include people they have never met. Participants are then encouraged to invite others to join in the exchange, where they will receive information on where to mail gifts. Once people stop participating in the gift exchange, the gift supply stops as well, and leaves hundreds of disappointed people without their promised gifts.

If you participate in one of these types of exchanges, you place at least two things at risk. You could face penalties or fines for participating in an illegal pyramid scheme, and you are putting yourself at risk for identity theft by providing your personal information to strangers.

Prosecution for participating in pyramid schemes is determined by local authorities. However, the Federal Trade Commission has occasionally prosecuted those involved in pyramid schemes as deceptive trade practices, or fraud. Those convicted have had to pay fines and or spend time in prison.

If you receive a chain letter by mail, email or social media, especially one that involves money or gifts, the BBB recommends:

  • Check with the BBB before becoming involved in suspicious and possibly illegal activity.
  • Disregard it. To avoid this scam, the best thing to do is completely ignore it altogether. Chain letters via social media and U.S. mail that involve money or valuable items and promise big returns are illegal. If you start a chain letter or send one, you are breaking the law.
  • Protect your information. Remember, your personal information is valuable. Do not provide it to anyone you don’t know.
  • Watch for imposters. Remember, some chain letters try to win your confidence by claiming they’re legal and endorsed by the government.

The U.S. Postal Inspection Service offers information about chain letters at www.usps.gov/websites/depart/inspect. You can also call the Postal Inspection Service toll free at (888) 877-7644.

For more advice on staying safe this holiday season or to share your experience with a business, go to bbb.org. To report fraudulent activity or unscrupulous business practices, call the BBB at (903) 581-5704 or report it via the BBB Scam Tracker.

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