Kiwi women warned not to buy into 'gifting circles'

The Commerce Commission says women's gifting circles are likely to be illegal pyramid schemes.

The Commerce Commission has warned women to avoid buying in to women's gifting circles, which it considers to be an illegal pyramid scheme.

The commission believes a number of gifting circles were set up in New Zealand last year and some are still operating.

The scheme began in the US and Indonesia. Women are typically asked to join by a friend or family member.

They are asked to pay a "gift" of $7000 in return for empowerment, wisdom and sisterhood and the promise of $56,000 should they attain the "Lotus" status.

The commission received complaints about the scheme last year. Its head of investigations Ritchie Hutton said the circles appear to have largely affected communities in Nelson, Tauranga and West Auckland.

"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."

"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. 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."

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

The Commission can be contacted on 0800 943 600 or contact@comcom.govt.nz.