Hard times and easy marks

If you have elderly relatives living in Woy Woy – is there anyone who hasn't? – it might be time to give the old dears a ring. While you're chatting about petunias and bowls, casually ask if anyone they know is considering a “business plan” which promises to turn $180 into $70,000 in a couple of months.

Chain letters are back. Perhaps they thrive in bleak economic times, with more people eager to suspend normal scepticism and accept any proposition which offers to deliver them from the squeeze of diminishing nest eggs and rising household bills.

This one (partly reproduced above, with the five-cent coin sticky-taped to the top) turned up in my letterbox the other day. With no markings on the envelope, it probably was hand-delivered. This suggests hundreds of other households in Woy Woy, and perhaps more widely around the Central Coast, are now receiving the same scam letter.

It is a scam. Throw it out. If your oldies in Woy Woy have received it and not done so, you may need to explain why it's a scam.

And even if you concede the authors appear reasonable and honest – philanthropic, even – you should be able to explain why the scheme just cannot work.

I spent a bit of time browsing the internet to find something which explains clearly, in plain language, why such chain letters will end in disappointment.

I came across many pages explaining they're illegal, they're scams, they probably come from conmen, and you should throw them out.

Of the many pages from government consumer protection agencies, this one from the Australian Competition & Consumer Commission seems as good as any.

But the government warnings still have a Big Brotherish feel ("I'm from the government, trust me and do what I say"). They fail to explain why the chain letter cannot work beyond a few early rounds (although this US page may help).

The letter which turned up in my box is a basic, unadorned chain letter. In the middle of a superbly drafted spiel, you see a grid with five handwritten names and addresses, ranked one to five.

The letter urges the recipient to send a $10 banknote to the person named on the top line. Then strike out that name, move the others up a notch, and put your name on the fifth line.

Make at least 200 photocopies – not forgetting to affix a five-cent coin to the top of each front page – then mail or distribute them to names taken from a phone book. Here's what should happen, according to the chain letter:

HOW THE SYSTEM WORKS IN 60 DAYS

You have sent your $10 note and mailed at least 200 letters. Your details are printed at number 5 position on each of them. Your work is done - sit back and relax, you deserve it!
If only 3% of 200 people respond to your letter, then 6 people will mail 200 letters =1200 letters with your name and address at position number 4.
If only 3% of 1200 people respond to your letter, then 36 people will mail 200 letters =7200 letters with your name and address at position number 3.
If only 3% of 7200 people respond to your letter, then 216 people will mail 200 letters =43,200 letters with your name and address at position number 2.
If only 3% of 43,200 people respond to your letter, then 1296 people will mail 200 letters =259,200 letters with your name and address at position number 1.
If only 3% of 259,200 people respond to your letter then 7,776 people will send you $10, your
name and address in the receiver position at number 1 [sic]. You will therefore receive $77,760 in $10 notes!
If the response rate is more than 3% of people send more than 200 letters, you will receive even more!

You could ask your oldies whether they understand geometric progression, or exponential growth. (If they do, you shouldn't have to explain why a chain letter cannot work for long!)

If they don't, you could point to the final pars of “How the system works . . .”

If 7776 people each send you $10, each of those 7776 people will expect to reach No 1 themselves after four more rounds, when each of those 7776 people will expect about 7776 people to send them $10.

At that point, more than 60 million people [7776 x 7776 = 60,466,176] should each be stuffing a $10 note into an envelope and sending it on. And that's not accounting for the thousands of $10 notes harvested by other names as they rise to the top, and those raked in by any other chain letter doing the rounds.

What was the population of Australia, again?

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