Pyramid selling

Chain letters

Chain letters involve sending money or gifts to a person on the top of a list while you add your name to the bottom. These are another form of pyramid selling and are illegal.

Usually a letter or email will ask you to send a small amount of money to everyone listed in the letter. 

You put your name at the bottom of the list and send out copies of the letter to as many people as you can.

The letter claims you will receive a large amount of money in a short space of time.  This rarely happens.

How you lose money

In a chain letter scam you lose your money in two ways:

  • you send money to the scammers who sent you the letter
  • you waste money on postage and photocopying costs.

Warning signs of a chain letter

A letter or email you receive may have these warning signs:

  • promise you money or good luck if you copy it and send it to a number of other people
  • suggest you will have bad luck if you don’t, or lose out on a fantastic opportunity
  • include a token amount as a demonstration of good faith, such as five cents, and recommend you send the same in your letters
  • contain claims it is not a scam or pyramid scheme
  • contain testimonials from people who claim to have made a fortune by taking part.

If you receive a chain letter

If you have received a chain letter your best response is to throw it out. 

You will only be wasting your time and money by forwarding it on to other people.

For more advice contact NT Consumer Affairs.

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Last updated: 11 June 2015

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