Another Chain Letter: Why This One Won’t Work, Either

“You must follow the simple instructions exactly, and in less than three months, you will receive $800,000. GUARANTEED,” promise the two identical, unsigned letters I received in the past month. That statement alone should make anyone skeptical – not only the promise of a return far beyond what even Warren Buffet can generate, but also the guarantee. Who is backing it? No one I’d trust, I’m sure.

I read the second letter carefully, curious about the pitch it was making. I found the basic elements of a typical get-rich-quick scheme. It offered a logical sounding (though somewhat vague) plan to bring in lots of money with very little work, a hard-to-resist lure. If I send a dollar to each of six people and send letters to others, asking them to do the same, this letter promises, my initial “investment” will increase exponentially.

But this letter has a few twists. It directly addresses some of the common arguments against chain letters, such as their illegality, their low rate of response, and their senders’ decreased reputation among friends and family. Specifically, when I send people money, I am to ask to be included on the person’s mailing list, and when I send out letters, I should buy a mailing list rather than sending the requests to people I know. “We’ve gotten around the problems of a typical chain letter,” this letter seems to say, but the plan is still bound to fail. It is a pyramid scheme at heart, and it will not work.

Just in case you get this same letter, consider the elements of this “improved” money-making plan and the reasons why you are more likely to lose money than make any:

First, the letter protests a bit too much about its legality: “In order to be completely legal, you must actually sell something in order to receive a dollar in return. So when you send a dollar to each of the names on the list, you include these words. ‘please put me on your mailing list’… The item you will receive for the dollar you send to the six people below is the letter…. When you send out these letters, you are in the mail order business. People are sending you $1.00 to be put on your mailing list. It is a legal, helpful service.” I am not a lawyer, but I fail to see how sending unsolicited “merchandise” of very little value in the hopes that someone will pay you for it qualifies as a legitimate business. It is not helpful, and I doubt it’s legal. Furthermore, I am already on the mailing list, so why should I pay a dollar to be added?

The letter also has a “new” solution to the problem of nay-saying friends and family. Not only does it recommend keeping my actions a secret until the “business” succeeds (good advice; I will save myself from some ridicule when it fails), it also tells me not to send them any of my letters. Instead, it tells me to buy a mailing list and suggests two companies from which I can get a list of people who “requested money making instructions within the last 45 days.” I recognized one as something I had signed up for in order to receive a related freebie – Home Business Magazine. I didn’t realize I was requesting “money making instructions” when I signed up.

To give the author some credit, the letter does address the fact that only a small portion of the people to whom I mail it will actually respond – its estimate is fifteen people out of every two hundred. The problem is, however, that everyone is working from the same pool of names. It’s possible that fifteen out of every two hundred people will respond to such a letter, but it’s doubtful that they will respond to multiple letters. Eventually, as with any pyramid scheme, the number of potential “entrepreneurs” quickly becomes negligible, and only those at the top of the pyramid have made any money. The letter also downplays the fact that I am still paying for the names, the printing, and the postage.

Just in case I’m not wowed by the idea of this “perfectly legal” business proposition I should postpone mentioning to my family and friends, the letter includes some helpful tips about managing a high volume of incoming mail and money. “Sow 10% of your income to charitable contributions (You reap what you sow). Save 20%, set aside 10% for next business project or mailing list. 10% for bills, 30% for taxes, and 20% to play with.” That’s not a bad budget plan, and it appeals to the recipients’ best intentions – the money for charity assures me I’m not being greedy, while the 10% for bills suggests that I will be living well below my means. However, anyone wise enough to know how to budget should also be wise enough not to fall for a get-rich-quick scheme.

As with any money-making opportunity, it’s important to evaluate the logic of the plan and research the reliability of the people involved in it before investing a dime. Take some time to learn about classic get-rich-quick schemes and how to recognize them to prevent being fooled by an old fraud in new clothing.

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