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Chapter 15. Scams > Pyramid Schemes - Pg. 117

Scams 117 Social Security Scam Social Security is not a scam. However, there are swindlers who tell senior citizens that they can get back from the government all the Social Security tax payments that were made throughout their lives. For a small processing fee of usually about $100 and a percentage of the refund, the con man (or woman, for equal opportunity criminals) promises to file the proper claims forms with the IRS. This is a total fraud. Social Security tax payments are not refundable under any circumstances. The victims of this scam pay their fee and wait for the refund that never comes. Pyramid Schemes Pyramid schemes are so named because if you diagramed the scheme it would resemble a pyramid with ever increasing members descending from its initiator. But they also could have received this name because this particular scam has been around so long that it might well have been present at the time the pyramids in Egypt were being built. Pyramid schemes keep surfacing with slight variations in terminology and subtle changes in sub- stance to make them look legal. But they are not. A recent incarnation of the pyramid scheme involved a "gifting club" where people made cash "gifts," which really were not gifts, to high-ranking members of the club with the promise that as they recruited new members to the club, they would rise through the ranks to a position where they would be receiving "gifts" from new members in large amounts. The problem with this is the same problem with any pyramid scheme. Eventually you run out of people and those left on the bottom of the pyramid lose everything. It is a scam, pure and simple.