Don't fall for the Secret Sister gift exchange

A Secret Santa around the office or with loved ones can be fun. A gift exchange among online friends you haven't met is a little different and carries a heftier consequence. While those gift exchanges look innocent, they are pyramid schemes and illegal.

The Secret Sister gift exchange campaign quickly became popular several years ago through Facebook posts, promising participants would receive up to 36 gifts in exchange for sending one gift.

Each holiday season the scheme pops back up. One version of the scam revolves around exchanging bottles of wine or bourbon; another suggests purchasing $10 gifts online. You might see references to receiving "happy mail" or doing the exchange "for the good of the sisterhood." During the 2025 holiday season, be aware of variations of this scheme that may crop up on social media.

How the scam works

The scheme starts with a convincing invitation, either by email or social media, to sign up for a great, fun program. All you must do is provide your name and address and the personal information of a few additional friends and tack that information onto a list that's already started of people you've never met on the internet. Next, it's your turn to send an email or social media invitation to send a modest gift or bottle of bourbon to a stranger, along with their friends, family and contacts.

A newer twist on the idea asks you to give your e-transfer email and ask users to pick a name off a list and send money to strangers to "pay it forward."

There was another new twist called Secret Santa Dog, in which you were asked to buy a $10 gift for a "secret dog."

In all of those versions, you give away your personal information, and you're left buying and shipping gifts or money to unknown individuals, hoping someone else will reciprocate the favor by sending the promised number of gifts in return. Unfortunately, it often doesn't happen. Like any other pyramid scheme, it relies on recruiting individuals to keep the scam afloat. Once people stop participating in the gift exchange, the gift supply also stops, leaving hundreds of disappointed people without their promised gifts or cash.

Pyramid schemes are illegal in the U.S. The U.S. Postal Inspection Services said those gift exchanges are considered a form of gambling and that participants could be penalized with jail time, fines or a lawsuit for mail fraud.

Participating in those schemes poses another layer of danger. When signing up, the alleged campaign organizer asks for personal information such as a mailing address or email. With just a few pieces of information, cyber thieves could expose you to future scams or commit identity theft.

How to avoid the scam

—Ignore it. Keep in mind pyramid schemes are international. Chain letters involving money or valuable items and promising big returns are illegal. Stop and ask, "Is it worth breaking the law?"

—Report it instead to the U.S. Postal Inspection Services.

—Report it to the social media platform. If you receive an invitation to join a pyramid scheme on social media, report it to Facebook or other platforms.

—Never give your personal information to strangers. Even your mailing address can expose you to identity theft and other scams.

—Be wary of false claims. Some pyramid schemes try to win your confidence by claiming they're legal and endorsed by the government. Those impostor schemes are false, as the government will never endorse illegal activity. No matter what they claim, pyramid schemes will not make you rich. You will receive little to no money back on your "investment" or gift exchange.