Why Holiday Gift Exchanges Are Illegal Pyramid Schemes

Fans of the old horror movie Poltergeist 2 remember the classic line “They’re back” and so it is with the classic Secret Sister scam which returns each holiday season It seems harmless enough when you see it come up in your email or on social media, such as Facebook or X, where it has increasingly been found lately. It is often titled the “Secret Sister Gift Exchange.” Commonly it provides you with a list of six people and you are told to send a gift worth at least ten dollars to the first person on the list, remove that person’s name from the list, move the second person on the list to the first position, add your name to the end of the list and then send the list to six of your friends. In theory, you will receive thirty-six gifts for your small contribution of ten dollars.

So where is the harm?

First of all, it is a blatantly illegal chain letter and violates Title 18 of the United States Code, Section 1302 which considers them an illegal lottery. In addition, like all chain letters, it is destined to fail because it is a pyramid scheme where ultimately there are not enough people in the world to sustain it Chain letters are also considered mail fraud for sending and receiving gifts under false pretenses.

Some instances of these chain letters have turned up on Facebook where it is a violation of your Facebook terms of agreement, so you potentially face the loss of your Facebook account if you participate in the scheme.

While many of the chain letters involve relatively small amounts of money, some of these fraudulent schemes operate on a much larger scale. Between 2020 and 2023, LaShonda Moore and Marlon Moore operated the Blessings in No Time (BINT) pyramid scheme. The Moores portrayed it as a community gifting program where participants were invited to join a “blessing board” lured by promises of 800% returns. Each new member paid a “gift” generally $1,400 to join the first of the three tiers of the blessing board although some participants paid as much as $62,700 to join the program. The second tier consisted of people waiting to move up the board and the top tier of the blessing board consisted of people receiving their “blessings” through payouts, generally $11,200 In order to become eligible to move up the board, participants had to recruit others to participate in the blessing board which is the model of an illegal pyramid scheme. Like all pyramid schemes it depended on continuously adding new people to the pyramid. For every member who may have received the promised payout through BINT, eight additional participants had to pay into the scheme. When recruiting of new participants inevitably slowed, most participants lost their money.

The first legal action against the BINT was filed jointly by the Federal Trade Commission and the Arkansas Attorney General on June 16, 2021 on the grounds that it constituted an illegal pyramid Scheme. Days later the Texas Attorney General filed a similar civil lawsuit.

In July of 2023 the FTC/Arkansas complaint was settled with the Moores being prohibited from operating future pyramid or multi-level marketing schemes as well as being required to pay $450,000 to repay victims of the pyramid scheme. At the same time Texas obtained a $10.76 million judgment against the Moores. However, this was not the end of the Moores’ troubles. On November 8, 2023, the Department of Justice indicted the Moores on conspiracy to commit wire fraud, wire fraud and money laundering charges related to the BINT pyramid scheme. LaShonda Moore and Marion Moore pleaded guilty to the money laundering charges on January 16, 2025 and are facing a sentence of as much as ten years on this charge. Their trial on the remaining charges is scheduled for January 5, 2026.

Like the Secret Sister Gift Exchange, BINT was nothing more than a repackaged chain letter. You should avoid all chain letters regardless of the guise under which they appear. They are illegal and ultimately doomed to fail. Even if you are an early “investor” in the program who received payments, those payments are generally “clawed back” by law enforcement when they crack down on the scam.