35.1. S.43 of the Act makes it an offence to invite others to join a chain gift scheme or to participate knowingly in the promotion or administration of a scheme. These schemes have many of the features of pyramid selling schemes, but escape the ban on them because they do not involve the sale of any product. A person found guilty of the offence could be liable to a fine or imprisonment.

35.2. The Commission is aware that local authority trading standards officers have considerable relevant experience in dealing with chain gift schemes and are well placed to deal with schemes that arise from time to time. The Commission will keep its role in tackling chain gift schemes, where there is a gambling issue related to the scheme, under review so that if more concerted action is required centrally it can liaise with other bodies to determine what action may be taken.

35.3. The chain gifting offence is part of a suite of consumer protections set out in the Consumer Protection from Unfair Trading Regulations 2008 (opens in new tab). The main element of consumer protection against these schemes is publicity to prevent people becoming involved in them. Local authorities may wish to use their websites and other publicity tools to educate consumers against participation in such schemes.

35.4. If licensing authorities are contacted by members of the public regarding schemes of this nature they should, in the first instance, refer to their trading standards department as they are likely to have relevant experience of dealing with chain gift schemes, lottery-style scams and similar arrangements.

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Last updated: 14 September 2023

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