Women warned by Commerce Commission for operating illegal pyramid scheme

The Commission began investigating the Women’s Gifting Circle in 2017 after receiving a series of complaints.


Devdiscourse News Desk | Wellington | Updated: 04-09-2019 08:23 IST | Created: 04-09-2019 08:23 IST
Women warned by Commerce Commission for operating illegal pyramid scheme
Women’s Gifting Circles originated in the US and Bali, and the Commerce Commission considers that they are likely to be illegal pyramid schemes. Image Credit: ANI
  • Country:
  • New Zealand

Four women have been warned by the Commerce Commission for likely breaching the law by promoting and operating a pyramid scheme in New Zealand.

The Commission began investigating the Women’s Gifting Circle in 2017 after receiving a series of complaints.

Women’s Gifting Circles originated in the US and Bali, and the Commerce Commission considers that they are likely to be illegal pyramid schemes.

Individuals typically join the scheme after being invited by a trusted friend or family member. They are asked to pay a “gift” of around US$5000 in return for empowerment, wisdom and sisterhood and the promise of US$40,000 should they reach the circle’s top status of leader or “Lotus”. The scheme involves the continual recruitment of new members to join and pay gifts in order to fill a circle’s 15-person structure and allow for the formation of new circles.

Commission Chair Anna Rawlings says in the Commission’s view, by organizing and recruiting women to join the circles all four women likely breached the Fair Trading Act.

“The Commission considers that the Women’s Gifting Circle is likely to be a pyramid scheme operating under the guise of a personal growth network. Promoting a pyramid scheme is specifically prohibited by the Fair Trading Act because these schemes commonly mislead about the likely financial rewards of membership. Pyramid schemes require constant recruitment of new members to buy in and inevitably people lose out financially as recruitment dries up, and in this scenario, the circle collapses. This can often have significant financial impacts on the lives of individuals involved,” said Commissioner Anna Rawlings.

More than 200 letters will also be issued to other members of the Women’s Gifting Circle, advising them of the Commission’s warnings.

“We consider these circles to be scams and would urge any person who may find themselves associated with them to take the Commission’s concern with Women’s Gifting Circle seriously, and to stop any ongoing involvement immediately.”

The Commission is aware of other likely pyramid schemes, similar in nature to Women’s Gifting Circle, surfacing on various social media platforms and is advising all New Zealanders to avoid them, and encourage their family and friends to do so too.

“It is important to remember if the offer sounds too good to be true, it probably is,” says Ms. Rawlings.

Any individual found to be promoting or operating a pyramid scheme may be breaching the Fair Trading Act and could be subject to a criminal conviction and a fine of up to $600,000 per offense.

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