2009-01-15 / Opinion

No free lunch ...

The phone rang Wednesday morning last week, and it was a call from a woman who claimed that the gifting clubs that have suddenly sprung up in the county are taking a bad rap.

“They’ve done some wonderful things for many people,” she said.

No, definitely not. As near as I can figure, anyone who has gained a penny from this program is a crook — a big time crook — and should serve time in jail.

Pyramid schemes like this crop up from time to time, and they all have the same principal — get lots of people to “invest” money and distribute the money from those who join later to those who joined early. To be a success, it requires greed and at least a tacit willingness to screw your neighbor.

The current deal works something like this: Somebody puts in $5,000 on your behalf and you try to get others to do the same. Once you’ve convinced enough other people to join in, you get to cash out and take an 8:1 return on your “investment.” Put another way, you’re stealing $40,000 from other women.

I’m not a woman, so I’m not eligible to participate. So I’ll take the words of a woman who was pressured to join in this scam by some of her friends. She declined.

She said she knows of someone who took out a home equity line to join because that woman’s “friend” got the money in 30 days.
She also knows of women taking cash draws on their credit cards because they “know” they will get the money.

She noted: “Do you know the kind of fees they incur when they take a cash draw? Often times it’s 1%-4% PLUS a fee! Not only will they be in debt another 5K plus the fees, but they’ll have NOTHING to show for it!”

Those are the women that will be victims.

“Those are the ones,” she said, “that, in this already failing economy, could end up losing their homes or needing to file bankruptcy because they can’t pay the debt ... because obviously, they don’t have 5K to ‘invest’ in the first place.”
“It’s horrible!”

Police will have a hard time putting a stop to this. Most people who end up making the money won’t complain. And a large number of those who get duped will likely be too embarrassed to complain.

There is no free lunch.


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