SALEM, Ore. — Officials from the Oregon Dept. of Consumer & Business Services issued a statement on Wednesday warning the public to steer clear of "gifting clubs," an increasingly prevalent form of illegal pyramid scheme.
An example cited by the agency is called the Death Row gifting club — no relation to the hip-hop record label — that started popping up in Oregon last year. The club advertised on social media and in online forums as a "community wealth share group," but at least 20 Oregonians lost their $1,400 initial investments.
"The Death Row gifting scheme promised financial returns of at least $9,000," DCBS said. "The division was alerted to the scheme when an Oregonian reported not receiving anything in return for their $1,400 investment."
State officials say that no one was licensed to sell investments in Death Row, and the investment was not registered. Victims paid their money through a cloud-based payment platform and communicated about the investments on online forums with others.
Gifting clubs are similar to pyramid schemes in that no new money is created. Instead, members encourage friends, family, co-workers and strangers to give gifts of cash to higher ranking members — the only way to make that money back is to bring in new members.
“If someone invites you to join a gifting club, just say no to their high-pressure tactics and stories of high earnings,” said TK Keen, Division of Financial Regulation administrator. “The simple reality is that only a few people profit from these schemes at the expense of everyone else who ultimately lose their investments.”
DCBS says it is still investigating the Death Row gift club. Anyone who has information about the scheme or was a victim of it are asked to contact the Division of Financial Regulation Advocacy team at 888-877-4894.