Don’t fall for the Secret Sister gift exchange scam

Business

Been asked to join a gift exchange like Secret Sister? Find out why you need to avoid this pyramid scheme scam at all costs!

It’s that time of year again. The Christmas gifts are appearing in stores, MLM reps emotionally blackmail friends and family to buy from them to ‘support a small business’, and the Secret Sister scam starts doing the rounds on social media.

In case you’re fortunate enough not to have come across it, Secret Sister is a gift exchange pyramid scheme in which you send out one gift and and then recruit six people. The theory is that you’ll then receive 36 gifts back.

But it doesn’t take much a of genius to work out that if people are receiving 36 gifts but only sending one, then someone is losing out; the maths just don’t make sense.

And the loser is quite likely to be you.

How does the Secret Sister gift exchange work?

So how do Secret Sister schemes work? You’ll usually be invited by a friend or tagged in a Facebook post, like this one:

Or this one:

Here’s a typical set of instructions:

  • Send one gift value at least $10 to secret sister #1 below.
  • Remove secret sister’s name from #1; then move secret sister #2 to that spot.
  • Add your name to #2 with your info.
  • Then send this info to 6 other ladies with the updated name info
  • Copy the secret sister request that I posted on my wall, to your own wall. If you cannot complete this within 1 week please notify me, as it isn’t fair to the ladies who have participated and are waiting for their own gifts to arrive. You might want to order directly from a web-based service (Amazon, or any other online shop) which saves a trip to the post office. Soon you should receive 36 gifts! What a deal, 36 gifts for giving just one! Be sure to include some information about yourself … some of your favorites. Seldom does anyone drop out because it’s so much fun to send a gift to someone you may or may not know … and of course it’s fun to receive. You should begin receiving gifts in about 2 weeks if you get your letters out to your 6 people right away.

Seems easy enough, right? And what do you have to lose by giving it a go? Who knows, it might work! The problem is that it’s mathematically impossible for it to work, as the US Postal Inspection Service point out in their warning about the scam.

Let’s do the numbers to demonstrate.

By 11 levels of participation in Secret Sister you need almost TWICE the population of the world

Just like MLMs, Secret Sister gift exchanges use extremely flawed numbers to sell their pyramid model. They tell you that you just need to recruit six people, who recruit six people… and so on.

It sounds feasible, but as you can see, once you get a few layers down, the pyramid enters the realm of complete fantasy:

  • 1 (you)
  • 6 (the six people you recruit)
  • 36 (the people they recruit)
  • 216 (the people they recruit)
  • 1,296 (the people they recruit)
  • 279,936 (the people they recruit)
  • 1,679,616 (the people they recruit)
  • 10,077,696 (the people they recruit)
  • 60,466,176 (the people they recruit)
  • 362,797,056 (the people they recruit)
  • 2,176,782,336 (the people they recruit)
  • 13,060,694,016 (the people they recruit)

By just eight levels of participation you need almost the entire population of the UK to be playing. By nine you need more than the population of the USA. And by 11 levels you need almost TWICE THE WORLD’S POPULATION!

The only place this kind of pyramid logic makes sense is in MLM land, where they use the same ridiculous recruitment sales pitch to hook people in.

You could be breaking the law by joining a Secret Sister scam

Losing money isn’t the only reason why you should give Secret Sister scams a wide berth. It’s important to remember that chain letter schemes that involve money or valuable items and promise significant returns are illegal.

If you start a chain letter, or even participate in one sent to you, you could be breaking the law. They’re a fraudulent system of making money (or receiving gifts) that need an endless stream of recruits for success.

So by participating in a Secret Sister gift exchange (which is just a fancy label for a chain letter scheme) you could be breaking the law.

What to do if you’re asked to join a Secret Sister scam

So what should you do if you’re invited to join a Secret Sister gift exchange? The Better Business Bureau recommends that you:

  • Ignore it – Don’t participate. Ignore the invite, or send the person who invited you a link to an article like this one.
  • Report it – If you’re in the US, you should report the scam to the US Postal Inspection Services. If it’s a Facebook post, make sure that you report it to Facebook by clicking in the upper-righthand corner and selecting “Report post” or “Report Photo.”
  • Don’t give anyone your personal information – you can make yourself vulnerable to identity theft and other scams. Remember, these schemes are unlikely to have been started by a genial, Santa-like figure.
  • Be wary of false claims – If anyone tells you the scheme is legal or endorsed by the government they’re lying.

It’s unethical to recruit people into a Secret Sister scam

If you’ve read all the above and are still willing to give it a shot – after all if you just get one gift back you’ve recouped your investment – then we have one more reason why you should walk away: it’s unethical.

You already know that the Secret Sister gift exchange is mathematically impossible to sustain. You know that chain letters are illegal. And you know that for it to succeed for you, you have to receive more gifts than you send.

So someone has to lose out. Possibly many people. Do you really want to participate in that? And worse, to convince your friends and family to join… and quite possibly lose money?

We believe that if you can be aware of all the above and still take part, then that doesn’t make you a very ethical person.

A far better choice would be to buy a gift and give it to one of the charities that collects gifts for children in need. Here are some suggestions:

You may not have the hope of getting 36 gifts back, but the knowledge you’ve helped make a child’s Christmas happier will bring you more joy.

Need a quick summary of why the Secret Sister gift exchange is a scam?

Here’s an infographic that explains why the Secret Sister gift exchange is a scam. We found it on Reddit here, but can’t find an original link to credit it to. (If you’re the creator and have a link we’d be delighted to add it.)

Photo by Kira auf der Heide