You’ve no doubt heard from friends or coworkers or seen or received e-mails inviting you to participate in a chain-letter program. Typically, the invitation will promise you a large sum of money, even suggesting the possibility of $1 million or more in a short time, if you send say $5 to the 4 to 6 people at the top of the list. You then add your name to the bottom of the list and drop the top name off the list. The idea being that your name will move up the list as others add their name to the bottom until you are in a position to have money sent to you.
To participate, you are required to mail the participating fee of $5 to the required number of people, and then mail or e-mail as many copies of the letter as you can to people you know, hoping that they will do the same for you. The letters are liberally sprinkled with references to how much money can be made and how many people are sure to participate. Messages sometimes include phony promises from companies or wealthy individuals (such as Bill Gates) promising a monetary reward to everyone who receives the message.
Chain letters are based on the same principles as pyramid schemes. You buy into one and then you have to recruit others below you to move you up the line. The people you recruit, in turn, need to recruit others, and so on.
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Pyramid Schemes Are Illegal
Don’t believe it if the chain letter you receive says it’s approved or it’s legal. Chain letters are illegal because you’re paying money for nothing and the whole thing falls apart if the recruiting stops. They are considered to be a form of gambling. In the United States it is illegal to mail chain letters that involve pyramid schemes or other such financial inducements under Title 18, United States Code, Section 1302, the Postal Lottery Statute