Wednesday, 9 July 2008

Watch out for David Rhodes and his crazy chain letter

About two weeks ago, I received a letter in the mail addressed to "T. Chin", Upon opening it, I discovered it is a letter from David Rhodes. It had a 5cent coin taped to the top corner of the letter. It certainly caught my attention on what it was all about. Having never heard of David Rhodes, I read a bit more. It dawned on me that this is a classic pyramid scheme/chain letter that no one will ever be the winner. Furthermore, this type of activity is illegal and will incur a heavy penalty if found guilty. The Consumer Affairs of Victoria has a nice bulletin of what this chain letter is all about. The fines are more than $24,000! Wikipedia also has a good article on the history of this letter.

Essentially, the chain letter works by having you sending a gift of $10 to the person at the top of a list of 5 people. Of the 200 letters you send out, the person on the top of the list is removed and you placed yourself at the bottom of the list. The person that receives your letter will do just as you have done. You get your $10 when you have reached the top of the list.

That evening, I read it again trying to understand why so many people would be drawn into it and give it ago. Let's have a look at some of the letter characteristics.
  • The plan itself appears to be extremely plausible for it to work, and the instructions looks thorough enough for it work. It even contain steps on how to fold the letters so that the creases in the folded letter does not mess up any future photocopying by your receiver.
  • The chain letter contain a calculation of a scenario where it appears to be reasonable and realistic. It used a 3% response rate on letters that you sent out.
  • The outlay for the participation is about $200. Most people may think that this is not such a large outlay and would be willing to risk to receive the "guaranteed" $70,000 return.
  • Everyone loves a rags-to-riches story and caused them to think "if it happen to him, it certainly can also happen to me as well." The letter also contain several other rag-to-riches testimonials.
This is the first time that I have ever received such dangerous spam through the post. However, it is only dangerous if I acted upon it. The best thing I can do is take the 5cent coin off the letter and throw the letter into the recycling bin. At least that way, that letter did increase my wealth by giving me 5cent, better than nothing.

By the way, just found the Make Money Fast Hall of Humiliation. Reading the comments, I am amaze on how gullible some people are.

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