Lansing, Michigan – Attorney General Dana Nessel issues a strong warning to Michiganders preparing for the holiday season about the risks involved in engaging in criminal gifting schemes, which could seem as harmless holiday gift exchanges or supporting social circles. Often under the cover of communal helping those in need, these programs may cause significant financial damage.
Nessel underlines that although some are malicious pyramid scams running under the cover of rapid financial gain, authentic giving circles are built on non-monetary exchanges and create communal bonds.
“Gifting schemes frequently pose as acts of kindness or community support, but in practice, they take advantage of participants’ trust and leave most of them with significant losses,” said Nessel. “Michigan residents can safeguard themselves and their wallets this holiday season by becoming familiar with the warning signs of gifting scams.”
Genuine gifting circles center on the exchange of items like handcrafted gifts or services like babysitting—without including money. These circles depend on mutual confidence and the giving attitude. Still, the unauthorized versions offer notable returns depending on an initial outlay and the hiring of others. Usually under names like “Women Empowering Women” or “Circle of Friends”, these programs always fall apart financially and harm the participants.
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Promises of great returns for little effort, a strong focus on recruiting new members instead than on selling any genuine good or service, and transactions mostly involving cash or presents without official agreements are the obvious indicators of a gifting program. Testimonials from supposedly successful participants often lack transparency and cannot be verified.
Operating or participating in such schemes is not only unethical—it’s illegal under the Michigan Pyramid Promotional Scheme Act. Those pushing these programs may face felony charges with fines ranging from $10,000 to seven years in prison. Meanwhile, participants can be charged misdemeanors, fined up to $1,000, or potentially imprisoned.
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The IRS also considers any profits from these programs as taxable income. Ignoring these income sources could have serious financial and legal consequences including extra fines and penalties. The legal repercussions can be severe even if easy money looks appealing.
Michiganders are advised to exercise their due diligence: examine any dubious program, avoid exchanging personal information with strangers, and keep a reasonable doubt about investments that guarantee unrealized profits in order to guard oneself from becoming victim to these schemes. Remember, if something sounds too good to be true most likely is.
Attorney General Nessel advises anyone uncertain about the validity of a program or who comes across an alarming scheme to get in touch with the Consumer Protection Team. By contacting 877-765-8388 or submitting a complaint online, Michigan can help to ensure a safer holiday season for everybody.