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By Rob Price/Business Insider
November 19, 2018
A stock photo from Alamy shows the same photo that is being used in the  Secret Sister  scam gift exchange on Facebook.
A stock photo from Alamy shows the same photo that is being used in the "Secret Sister" scam gift exchange on Facebook.
Jeramey Lende—Alamy Stock Photo

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.”

A Facebook spokesperson did not immediately respond to Business Insider’s request for comment.

This article originally appeared in BusinessInsider.com.

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The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

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Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

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