What are chain gifting schemes?
These schemes work like a chain letter, only with cash. New recruits are asked to give money to another person in the scheme whose name is at the top of the list. The recruit takes the person's name off the top of the list and adds their own name at the bottom in the hope they will make it to the top and others will pay them.

These schemes always break down when the stream of new investors dries up. People joining at this point will lose their money. Typical examples include: Hearts, David Rhodes, Circles of Success and Women Empowering Women.

Legality of these schemes
In the past, the courts have found chain gifting schemes to be illegal lotteries as they are a distribution of money by chance for commercial gain. Lotteries in this country cannot be run for private or commercial gain. However, there is no legal definition of a lottery and it is for courts to decide whether a particular scheme is illegal or not. 

Government action to outlaw them
The Government is very concerned about chain gifting schemes. They are a con and a menace. There is absolutely no guarantee of the income promised for the outlay suggested and chain gifting schemes always break down when the pool of new investors dries up. Most people who join them will lose their money.

The Government has decided to ban chain gifting schemes in the Gambling Act. This will make it illegal to organise, encourage others to participate in, or receive benefits from, gifting schemes and could lead to a fine up to £5,000 or imprisonment for up to 51 weeks.

For further information, please refer to our 2004 press release on chain gifting schemes.