The Stettler RCMP are warning Albertans about a reoccurring pyramid scheme known as the "Gift Cloud".
This scheme operates by inviting participants into an "exclusive group" by contributing money towards a "pot", which will be given to the participant at the top of the pyramid, who is then removed from the group.
Following this, the pyramid may divide into smaller groups and those involved are encouraged to invite new members into the fold.
According to the Criminal Code of Canada on section 206 under subsection 1, subsection e pyramid schemes are illegal and Sergeant Phil Penny with the Stettler RCMP says participants in the scheme may encourage new recruits to keep quiet about activities or funds raised by the group.
"The message is: 'don't tell anyone about this. This is a secret between you and your friends in the group. Don't put it in a bank, use it to help other people out there.'"
Due to the negative connotations associated with pyramid schemes, Penny says organizers may try to vary the terminology to lure in potential "investors".
"They may say: 'it's not a pyramid scheme, it's a community or, it's a group of people just looking to help each other out.' 'It's not recruiting, it's inviting others to join the community or, it's not a pay out, its a birthday.' I've even it heard it described as: 'your rainy day has come in.'"
Due to the nature of pyramid schemes, continued recruitment becomes increasingly unstable with more members, which usually causes participants at the lower end of the pyramid to not receive their "pay out".
Penny says without new members, the pyramid collapses.
"Pay outs do happen, however, if for instance, I'm putting in my money I may not get it out because, maybe the pyramid isn't going to grow. It's entirely based on the pyramid growing, that's the only way participants are going to get anything."
The schemes may claim to support philanthropic causes and according to the RCMP, similar names in Alberta that have been used in the past are "Prosperity" or "Women Empowering Women."
Penny says, the best antidote to these schemes, is to do your homework.
"Do research on your own. It doesn't take much to simply go online and do some Google sleuthing and figuring out whether the organization you're looking to participate in, is legal. You should be asking yourself: 'what kind of risk am I getting myself into?'. It's really about slowing down and doing some research before investing money into these organizations."
The RCMP are advising residents who may have been involved in the organization, or those who have any information to contact their local RCMP detachment, Crimestoppers or the Canadian Anti-Fraud Centre at 1-888-495-8501.
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