How to avoid online pyramid scams


Have you ever gotten one of those chain letters that promises you immense riches for what seems like small or no risk? There are many different kinds of this sort of appeal, and more than time none of them results in a happy ending.

Here's one instance: "How would you like to obtain hundreds of thousands of dollars in the mail from total strangers? All you've to complete is send USD 10 towards the three names in the top with the list. Then take the #1 person's name off the list and put your name on the bottom and send this letter to 10 of your friends. Within weeks, your name will be in the top with the list and the money will start rolling in! What do you have to lose?

Well, you've USD 30 and maybe 10 of your friends to lose. And also the chances of thousands of dollars coming your way are fairly slim. A chain letter is a version of something called a "pyramid scheme," and it amounts to a form of gambling. There is also a financial scam that is similar, called a "Ponzi scheme."

If you obtain any of these appeals by e-mail or via a Web site, think about the way this works: Someone who's at the top with the chain will most likely find more than a few investors who will send money. Maybe one or two of the 10 friends you send the letter to will maintain the chain unbroken. But the chances are pretty great that your name will drop off the list, or the list will quit, lengthy before it has gone through as many as 10 waves of mailings.

Do the math: If you send out 10 letters, and each of your friends follows instructions and sends out 10 letters, the letter has now been duplicated and mailed 110 occasions. The next wave would have 100 individuals sending out 1,000 letters, and on and on.

If everyone cooperates, in the finish of 10 cycles there would be 10 billion individuals ready to send you USD 10 each. Slight issue there: The population of whole planet is about 7 billion. Other more significant problem: Most individuals throw away or ignore e-mail chain letters.

The only people who make money - generally not all that much - from a chain letter scheme are the first couple of people involved in starting the scam. They put their name at the top and hope to get as many people as they can to begin the ball rolling.

Before you think this is a superb way to begin a business, the U.S. Postal Service considers this sort of appeal as an illegal gambling scheme, and you will find also laws and regulations that apply to online operations.

Some individuals attempt to play on your emotions and fears by promising to cure cancer or feed the hungry if you keep the chain alive - or to curse you and your family for 10 generations if you let the chain break. If you wish to make a contribution to a legitimate charity, please do so. But do not let someone pick your pocket with a chain letter.

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This article was sent to us by: Cherilyn Patts at 01152011

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