The move comes as the Government published a final batch of clauses as part of the draft Gambling Bill. The Bill, which will modernise Britain's out of date gambling laws, is currently undergoing pre legislative scrutiny by a parliamentary committee.
Secretary of State for Culture, Media and Sport Tessa Jowell said:
"Chain gifting schemes are a menace. I've received many letters from people who have been duped into giving up their savings on false promises.
"One came from a woman in London who had been lured by the so-called 'Circle of Success'. She lost £3,000, but what made her feel worse was that she had persuaded her mother in law and two close friends to join. When the inevitable happened and the supply of new victims ran out, they all lost their money.
"This is no isolated case. The structure of the schemes mean nearly nine out of ten people who join up will lose their money. Only the scam artists at the top make a profit. At the moment they are operating on the fringes of the law, but not for much longer.
"Publishing the draft legislation today I want to send out two clear messages: that those operating chain gifting schemes are on borrowed time and that those thinking of joining one should think again – they are simply a con."
Schemes such as 'Hearts' and 'Women Empowering Women' currently evade rules outlawing pyramid selling. They are often targeted at women and in some cases have reportedly tried to ensnare unwitting celebrities to give them credibility.
When the Bill becomes law, the new Gambling Commission will be responsible for investigating schemes and prosecuting those who organise, promote or recruit into them. People merely joining up will not have committed an offence.
Other clauses published today set out rules around the provision of credit and inducements by gambling operators. It broadly maintains the status quo in this area, meaning the ban on casinos and fruit machines accepting credit cards will remain in place.
The only significant change involves giving the Gambling Commission flexibility to impose even tighter restrictions on the provision of credit if it concludes that it needs to do so to protect consumers.
Pre-legislative scrutiny of the draft Gambling Bill is currently drawing to a close. The Joint Scrutiny Committee has said they will publish their report on April 7th. After it has considered its recommendations the Government will put the Bill before Parliament as soon as the legislative timetable allows.
Note to Editors
