By Brian Konrad

City Police Issue Second Warning about “Gifting” scam

Jan 18, 2018 | 11:54 AM

Medicine Hat, AB. – The Medicine Hat City Police service is once again warning people about a pyramid scheme operating in the city.
 
It’s called a “Gifting Circle” or “Clouding”.
 
It involves a recruiter asking eight victims to pay a “gift” of $5000 each to the recruiter.  That person then leaves with $40,000 and the next level must recruit another eight people to pay $5000 each. 
 
In theory, if the pyramid continues everyone makes $40,000. But the model is not sustainable and inevitably collapses.
 
What actually happens in many cases is the initial recruiter leaves with the $40,000 and goes to a new territory to defraud another eight victims.
 
The scam has been reported in a number of cities in Western Canada to date.
 
It’s also the second time city police have issued this warning recently.  A similar warning came out in December.
 
The Medicine Hat Police service reminds everyone to be leery of get rich quick or easy money ventures.