What is cash gifting, and is it legal?
In short, cash gifting is simply the “gift” of giving cash to others, and hoping others will return the favor. It is essentially a pyramid scheme in which an estimated 90% of participants end up losing out on all their money.
If you’re truly interested in finding the best cash gifting system, here’s my two cents: stay away from cash gifting altogether.
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Cash gifting is indeed illegal in many states and countries. In order to try and get around the law, these gifting programs don’t call themselves a business, and have altered the pyramid structure so it doesn’t appear to be a pyramid on the surface. You also many times have to agree to sign something that says you are aware it’s not an investment, and you don’t expect anything back in return as it is simply a “gift”.
Taken directly from The Peoples Program’s FAQ:
They also state that by law, you are allowed to receive up to $12,000 as a gift by any other person per year, without having to claim it as income. However, I wouldn’t think this would apply to anyone involved in a scheme like this, and if you do indeed receive a large sum of money from a cash gifting program, it would be subject for taxing. If not you are putting yourself at risk with the IRS.
But let’s face it, no one is joining in on these programs to voluntarily give up their money–they WANT a return, preferably a large profit.
What makes cash gifting a pyramid scheme?
Many cash gifting organizations will try and tell you it’s not a pyramid scheme. They say this because many of them are structured differently as “one-up” marketing systems, however in my humble opinion it’s not all that different.
Let’s look at the definition of a pyramid scheme:
So basically, in this type of business, you’re making money purely off of enrolling other people into the scheme. There is no product or service being offered.The money you’re paying to join in on the program (scheme) is being given to people above you in the program. The only way to make money is to continuously recruit people who go on to recruit more people, so that eventually the profits will trickle to you.
This is exactly what cash gifting is! There is no product or service. You are handing money to someone in order to join, in hopes you’ll be able to get more people to join, who in turn bring in more people to join, and so on, and so on.
Unlike MLM programs which may have legitimate (albeit overpriced) products to offer, there is no money being put into the system other than the cash gifts from newcomers. This is what makes cash gifting a true pyramid scheme.
So, how are one up cash gifting systems different?
Some cash gifting programs claim they aren’t pyramid schemes or MLM programs at all, because they use one up marketing. However, even though this system varies from having a classic pyramid structure, the truth remains that you are only profiting when new members join into the program. And with the one up system, you still have to give up your first recruits cash gift to your recruit–the person above you.
However different they try to make it sound, at the core it is essentially the same. With one up cash gifting, you’re just creating a system in which it’s easier for you to feel like you’re “at the top” however, you will never be at the top. The original members are always the ones at the top, and your chances of losing all your money are still very high.
The logic of this system is flawed because a system that relies exclusively on the recruitment of new members isn’t sustainable
Cash gifting is based on a seemingly never-ending pool of new members, which isn’t possible. Eventually, the available pool of newcomers will shrink to virtually nothing, and in turn there will be no new money entering the program, causing it to collapse.
When this happens, the original members of each cash gifting program and all the ones who joined earlier on are the ones who will benefit, at the expense of about 90% of the rest of the group losing money. This is how ALL true pyramid schemes work–the few members who joined early on will get their payouts as promised, then spread their testimonials to collect new members. But then, as more members join the program, the less cash they will get back themselves and the MORE cash the original members will get! Until eventually, there is no more new members joining, which means no more cash–and no way to pay any of the people who joined later on in the game.
Even with the one up cash gifting method, you’re still relying on profiting from new members, which like any other type of cash gifting method will eventually run dry.
Cash gifting is not the solution for making money online
I’ve reviewed many of the products, services and schemes in the “make money online” industry and cash gifting is definitely one of the worst things anyone could ever attempt. If I were you, I’d try another method to making money.
If you’re looking for an alternative, give my #1 recommendation a shot. It’ll teach you how to build a sustainable online business through something called affiliate marketing. It’s definitely not easy and no one will be throwing hundred dollar bills your way, but you can sleep better at night knowing you’re earning money in a way that’s at least legal.
Even if you do decide to involve yourself with cash gifting, you’re still going to need to consistently work at finding new members to join in order for you to sustain your income. And, you have to live with the fear it could collapse at any time.
Also, think about this–all the members involved in cash gifting (and any other pyramid scheme) who actually make a huge profit off the system are only making money at the expense of the majority of people in the program losing all their money. Is that something you want to be a part of?
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Have you ever been involved in a cash gifting scheme? I’d love to hear about it down below!