WOMEN in the Petersfield area are being warned to beware of a new pyramid ÒgiftÓ scheme which is sweeping across the district, promising massive cash returns of up to £24,000.
But this week, Petersfield police issued the stark warning: donÕt get involved unless you can afford to lose your investment.
Hampshire County Council trading standards officers said this week the government was considering outlawing the scheme, and urged women in East Hampshire to be wary about getting involved
A woman, who wished to remain unnamed, told The Herald she feared many people who could not afford to lose money were likely to face a Òbarren ChristmasÓ this year as strangers creamed off their investment money.
Inspector Steve Sargent from Petersfield police told The Herald: ÒIt is not illegal so long as people are not coerced into joining the scheme or deceived about the possibility of a return.
ÒYou should not enter this if you cannot afford to lose the original investment. If you donÕt mind losing the money then it is up to you.
ÒThere is a fundamental law that you canÕt have something for nothing. Eventually it is destined to fail and it will take a lot of people with it.Ó
Hampshire County CouncilÕs trading standards manager, John Whale, said: ÒHampshire Trading Standards Service has been aware of the Hearts scheme, which appears to target mainly women, for a number of months. To the best of our knowledge the scheme is not illegal but members of the public should be wary of investing their money into any organisation which will only return on the investment if there is a constant flow of new members.
ÒThe government indicated in the summer that it would be considering banning schemes of this type where money is exchanged but no goods or services are provided.
ÒWe would always advise Hampshire residents to be sceptical of schemes which offer an unusually high return on their investment.Ó
In June 2003 Tessa Jowell, Secretary of State for Culture, Media and Sport, announced new laws making it illegal to set up chain gifting schemes.
ÒThese schemes are an absolute menace,Ó she said.
ÒThe forthcoming Gambling Bill will make it illegal to organise, encourage others to participate in or receive benefits from such damaging gifting schemes.Ó
The Gambling Bill will be published in draft next month and is expected to become law in the summer of 2005.
The schemes have various forms and often use fancy words or techniques to confuse potential participants, but they all use the same pyramid method to gather money for the few in at the start.
They involve most of the participants losing their money when the scheme breaks down, as it must.ÊA few people at the top of the pyramid benefit, at the expense of the many below who donÕt.
If eight people form a circle, seven of them each pay £3,000 to the eighth.ÊThe seven with nothing then all have to get seven new recruits to give them £3,000 for nothing.Ê
The 49 new recruits then have to do the same, getting 343 people to hand over their money, all of whom will lose if they donÕt recruit another 2,401 people.ÊThe schemes quickly run out of new participants prepared to pay £3,000 for nothing.Ê
ÒAt whatever stage they collapse the great majority of people lose their money and there is nothing they can do about it,Ó warn trading standards officers.
Several women in the Petersfield area have reported being approached to join in this scheme by ÔinvestingÕ sums of money ranging from £3,000 downwards, with promises of eightfold rewards.
They have been reluctant to give their names but report that regular Heart Circle meetings are taking place throughout the area.
In the Isle of Wight the scheme was reported to have faltered within months because the small population could not sustain it, and at one point there were 300 different circles struggling to co-exist.