Why are chain letters illegal?

Question

I recieved the as seen on Oprah and 20/20 letter a couple days ago and when researching it I found on 20/20 that it is illegal and they never proved it. I think if it would cost you $50 to send a dollar to x amount of people and they were to respond it would help out the economy. I believe a lot of people right now would do something like that. I believe it's the rich not wanting the poor to get caught up. Millions of people right now are desperate and need the money so why not help each other out. I don't think you should need to copy 4 pages but the pyrmid right now is good idea, put your name at the bottom and move the first one off the list. Plus I think it could be fun. So why is something like this illegal? It's not puting people in debt thousands. Is it because the government can't easily tax it?

Answer 1

Chain letters are a Ponzi scheme(named after the first guy to try it).

The problem is; the first few people make money, but as the list gets longer the people at the bottom never get their money back.

Answer 2

They are illegal because there will certainly be only a few winners and many losers. Chain letters don't help the economy. They are a tax on the gullible. Nothing of economic value is produced by a chain letter. The end game is a few big winners at the top of the pyramid, more minor winners and some people who break even at the middle of the pyramid, and a massive number of losers at the bottom of the pyramid. The way to make money is by producing goods, services, and ideas, or by investing in companies that do this.

Answer 3

because people are stupid enough to fall for them, and the government protects the stupid.

after 7 or so times of everyone that gets the letter sending it to 20 people, you have exceeded the entire population of the world by quite a lot.

Answer 4

i don't know if  they're illegal but they're stupid and annoying.

Answer 5

Because people whose houses are not paid off and have their kids still living with them after college, or have little kids, house payments, gas/electric bills, water, phone, etc., do not have time to get involved in the chain letter schemes!!!

Answer 6

Chain letters are stupid and they clog up the postal system.  Pyramid schemes are more than just chain letters.  

Answer 7

I don't believe chain letters are in themselves illegal. However, when someone is doing a scam and asking for money, I believe they are illegal and the reason is because too many people have lost money through these based on their greed to get wealthy quick and they were so busy thinking about how they were going to spend their money (which they don't have) that they left all common sense behind in the process. Further, anytime someone is looking for investors by definition and they are asking for more than 12 investors, then generally one has to register the investment with the local state or SEC and "blue sky" the offering memorandum as an investment.

Answer 8

Send me $10 dollars and I will tell you why the are illegal.

Answer 9

Pyramid schemes are a scam. Chain letters that ask for money, are too. If you think throwing away your money is fun, just throw it away. Don't involve anyone else in your ignorance.