Women’s gifting circles ruled illegal scams

New Zealand women are losing thousands of dollars to illegal pyramid schemes that promise spiritual enlightenment.

The Commerce Commission started investigating women’s gifting circles after receiving complaints in 2016 and now considers them to be illegal pyramid schemes in breach of the Fair Trading Act.

A number of circles were set up over the past three years and the commission said some may still be active. The circles originated in the United States and Bali and women typically join the scheme after being invited by a trusted friend or family member.

Leaders invite women to make a one-off gift, usually of $7000, in return for empowerment, wisdom and sisterhood and the promise of $56,000 should they achieve ‘‘Lotus’’ status.

When eight women are recruited the leader of the group can take the entire cash gift. If they are unable to recruit others the groups can collapse.

The commission’s head of investigations, Ritchie Hutton, said the circles appear to have

"If you are approached to join a circle, don't."

affected communities in Nelson, Tauranga and West Auckland.

‘‘We consider the circles to be scams and likely to breach the Fair Trading Act. Women operating a circle or who invite others to join one may be committing a crime and could be fined up to $600,000 per offence,’’ he said.

‘‘If you are approached to join a circle, don’t. If you are already in a circle, you should leave and not encourage anyone else to join.

‘‘Like all pyramid schemes, this one requires the constant recruitment of new members to buy in and inevitably people get burned as new recruits dry up and the circle collapses.

‘‘These circles try to mask the insidious nature of their existence by requiring new members to sign a document saying they are ‘gifting’ the $7000 joining fee and expect nothing in return, while still promising a $56,000 payout if they reach the top of the circle as ‘Lotus’.’’

Last year, Nelson doctor Fran Halford spoke out after being coaxed into joining a circle. She said they were spreading ‘‘a spiritually-transmitted disease’’.

Halford was urged to keep her membership private, especially from men, and told not to read anything online about the circles.

‘‘They had this evangelical glow and chased me hard. I trusted them,’’ she said.

The commission wants to hear from anyone who has been approached recently to join a circle, or who has information that identifies a Lotus profiting from the scheme.