Last week I got a funny letter in the mail. It was a plain envelope with no return address and my name and address printed on an adhesive mailing label. Inside the envelope were several photocopied sheets of paper with a message addressed to “Dear Friend.” It purported to be a letter from a successful attorney who was able to quit his job and retire early after he took advantage of a brilliant “money-making program” to generate more than $800,000 in three months — guaranteed!
At this point I had a pretty good idea of what the letter was, so I scanned the rest of it. Sure enough, it was a pyramid scheme, a fraudulent enterprise that requires participants to pay money to participate. The business model is designed to make money for the top one or two people at the expense of the rest of the participants. This particular scheme seemed to be driven by a company called Data Line LLC, which sold names and addresses on adhesive stickers. Participants of the pyramid were supposed to buy several hundred names from Data Line in order to mail the chain letter out to make money. They then send a dollar to six people on the list and wait for other people to do the same for them.
The letter itself was pretty funny. It had been photocopied so many times that it was almost difficult to read. Someone had scrawled notes in the margins, saying things like “I’m a believer, too!”, “This works!”, and “”If we all do this, we’ll be helping each other.” There were also some jewels contained in the actual letter. It claimed over and over again that it was not a chain letter and that the system was perfectly legal. To prove this, the letter cited “Title 18, Sections 1302 and 1343 of the U.S. Postal and Lottery Laws. Unfortunately for the scheme organizers, those sections don’t say chain letters are legal. In fact, they say that if the chain letter qualifies as a chance operation, the participants could be fined or imprisoned. The letter also neglects to mention Section 1341 regarding mail frauds and swindles.
My favorite part of the letter was the assertion that this “plan” was different because “there were six names on the list, not five like many others.” Apparently, sending money to six people is better than sending money to five people. So the guy at the end is out $6 rather than $5. Much better indeed.
Anyway, I got interested in pyramid schemes, so I did a little research. As soon as you start doing the math, you see how pyramid schemes never work. There were six names on my letter, so let’s assume that I was at least 7 levels down from the first person who started the letter. If I wanted to send out the letters to make money, I would need to get six more levels of people to respond in order to make the $800,000. But because of the exponential growth of a pyramid scheme, there aren’t enough people in the entire U.S. to support more than 10 levels. In fact, after 12 levels, there aren’t enough people in the whole world to support the scheme. Check out Wikipedia’s excellent article for an illustration.
So will I be taking advantage of this “amazing offer”? I know you’re shocked, but I think I’m going to decline. This plan actually has enough tricks to it that it might be legal, but it’s still shady as can be and a sure-fire way to lose money. And I’d rather earn my money the slow, legitimate way.
Pyramid
Last week I got a funny letter in the mail. It was a plain envelope with no return address and my name and address printed on an adhesive mailing label. Inside the envelope were several photocopied sheets of paper with a message addressed to “Dear Friend.” It purported to be a letter from a successful attorney who was able to quit his job and retire early after he took advantage of a brilliant “money-making program” to generate more than $800,000 in three months — guaranteed!
At this point I had a pretty good idea of what the letter was, so I scanned the rest of it. Sure enough, it was a pyramid scheme, a fraudulent enterprise that requires participants to pay money to participate. The business model is designed to make money for the top one or two people at the expense of the rest of the participants. This particular scheme seemed to be driven by a company called Data Line LLC, which sold names and addresses on adhesive stickers. Participants of the pyramid were supposed to buy several hundred names from Data Line in order to mail the chain letter out to make money. They then send a dollar to six people on the list and wait for other people to do the same for them.
The letter itself was pretty funny. It had been photocopied so many times that it was almost difficult to read. Someone had scrawled notes in the margins, saying things like “I’m a believer, too!”, “This works!”, and “”If we all do this, we’ll be helping each other.” There were also some jewels contained in the actual letter. It claimed over and over again that it was not a chain letter and that the system was perfectly legal. To prove this, the letter cited “Title 18, Sections 1302 and 1343 of the U.S. Postal and Lottery Laws. Unfortunately for the scheme organizers, those sections don’t say chain letters are legal. In fact, they say that if the chain letter qualifies as a chance operation, the participants could be fined or imprisoned. The letter also neglects to mention Section 1341 regarding mail frauds and swindles.
My favorite part of the letter was the assertion that this “plan” was different because “there were six names on the list, not five like many others.” Apparently, sending money to six people is better than sending money to five people. So the guy at the end is out $6 rather than $5. Much better indeed.
Anyway, I got interested in pyramid schemes, so I did a little research. As soon as you start doing the math, you see how pyramid schemes never work. There were six names on my letter, so let’s assume that I was at least 7 levels down from the first person who started the letter. If I wanted to send out the letters to make money, I would need to get six more levels of people to respond in order to make the $800,000. But because of the exponential growth of a pyramid scheme, there aren’t enough people in the entire U.S. to support more than 10 levels. In fact, after 12 levels, there aren’t enough people in the whole world to support the scheme. Check out Wikipedia’s excellent article for an illustration.
So will I be taking advantage of this “amazing offer”? I know you’re shocked, but I think I’m going to decline. This plan actually has enough tricks to it that it might be legal, but it’s still shady as can be and a sure-fire way to lose money. And I’d rather earn my money the slow, legitimate way.