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SafetyAlerts
August 11, 2000

"Pit Stop", "Dinner Party", and Other Schemes Target Washington and Idaho Regions

The Better Business Bureau serving the Inland Northwest recently joined with Attorney Generals in Idaho and Washington to try to stem a troubling surge in pyramid schemes.

At a press conference to announce a settlement in "The Pit Stop" scheme, the BBB and law enforcement agencies discussed that and other popular schemes, including "The Original Dinner Party," which primarily targets women.

"Calls are pouring into the BBB from confused and uninformed individuals all over the Inland Northwest," stated Jan Quintrall, president of the BBB in Spokane. "We are concerned by how quickly these pyramid schemes are spreading from township to township."

Participants are invited by co-workers, relatives, neighbors, or fellow club or church members to attend private meetings. While invitees are not asked to pay any money up-front, eventually participants are asked to contribute $5,000 to buy a "square."

Owen Clarke of the Washington Attorney General's Office noted that the philosophy of charitable giving is often used to draw people in. "Organizers cloak their schemes in feel-good words like gifting and renewal celebrations, but it is nothing more than an age-old scam that separates people from their money... only a few people walk away winners. The majority lose everything."

Marilyn Thordarson, director of public relations at Sacred Heart Medical Center, and Cathy Loan, CEO, Spokane Catholic Credit Union (SCCU), discussed how easily people become caught up in the promise of "easy riches."

"We have had to send out a clear message to staff that solicitation (of such offers) within the workplace violates our personnel policy," Thordarson said.

The SCCU became aware of a gifting club when several members requested loan proceeds or savings withdrawals in cash. "Some members did not want their husbands to know about their transactions. Instead of becoming debt-free and empowered, members have fallen deeper in debt, jeopardizing personal relationships with those they have recruited into their clubs," said Loan.

People falsely believe that the Original Dinner Party and similar "gift" clubs are legal enterprises. Participants are told that state gifting "laws" permit their participation. They are also misled by false claims of endorsement from the FBI, the BBB and the Attorney General's Offices.

Almost every state has laws prohibiting pyramid schemes and/or assessing penalties on those who participate. In Washington State, for example, anyone participating in an illegal pyramid is violating the state Chain Distributor Scheme Act and is subject to penalties.

Sgt. Bob Pharris of the Coeur d'Alene Police Department noted that pyramid schemes are also illegal in Idaho. "Our Police Department will investigate and seek prosecution of the people involved."

The BBB advises consumers who are approached by such offers to ask themselves three questions:

Do I have to make an "investment" or give money to get the right to recruit others into the program?

When I recruit another person into the program, will I receive what the law calls "consideration" as a result? That usually means money.

Will the people I recruit have to make an "investment" or give money to get the right to recruit and receive "consideration" for getting other people to join?
If the answers are "yes", steer clear of the scheme. More information on how to tell a legitimate multi-level marketing opportunity from a pyramid scheme is available on the BBB web site. Go to http://www.bbb.org/library/tippyra.asp.

 
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Health Professional:

Did you know?
During 2000 there were over
1050 products recalled in the United
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