"Gifting Circle" Pyramid Scheme

Medicine Hat Police Service is warning the community of a pyramid scheme operating within the city referred to as a “Gifting Circle”.  This Gifting Circle is presented as legal, which should raise the first warning flag. 

How it works: A recruiter asks eight victims pay a “gift” of $5,000 each to the recruiter.  Then the recruiter leaves with the $40,000 and the next level must recruit another eight people to pay $5,000 so in theory everyone makes $40,000 if the pyramid continues.  In reality, that would mean after just 7 levels this pyramid scheme would involve over 2.5 million dollars that would be paid by victims.  This model will inevitably collapse leaving victims without a reciprocal payout.

What actually happens is the collapse after the first level, the initial recruiter leaves with the $40,000, then goes to a new territory or city and defrauds another eight victims.  This Scam has been reported in a number of cities in western Canada to date.

Due to the lack of a legitimate product or service and that, this model is not considered an investment; it a pyramid scheme.

In Canada, it is illegal to promote a pyramid scheme.  Furthermore, it is also illegal to profit in any way by deceit, falsehood or any other fraudulent means.

The Medicine Hat Police service would like to remind our community to be leery of get rich quick or easy money ventures.

If you have any questions or concerns please contact the Major Crimes Section of the Medicine Hat Police Service at 403-529-8420 or:

Information regarding this and other frauds can be found at:

Competition Bureau of Canada

Canadian Anti-Fraud Centre