Chain Letters, Pyramid Sales, Home Working Schemes, Multi-Level Marketing

Schemes such as pyramid sales, chain letters work by persuading the victim to send a copy of the letter to a number of new recipients and to send money to those named in the letter. By adding their name to the bottom of the list the victim hopes to eventually get some money back from other people down the chain.

All such schemes would need an infinite supply of new participants for everyone to make money. Since the supply will always be finite, the pyramid will eventually collapse and many, if not most, of the participants will lose their money.

A classic chain letter or invitation to join a scheme may contain phrases such as: -

• you will miss out on receiving cash gifts if you do not join;
• testimonials from satisfied investors;
• lists of names and addresses;
• instructions to send money to the people on the list;
• instructions to forward the letter to as many people as possible, modifying the list of names by removing the top entry and putting your own on the bottom.

Ask yourself?

Before you consider taking part in a pyramid scheme or chain letter you should ask yourself: -

• What am I being asked to pay for?
• Can I afford to LOSE the money?
• Does it look too good to be true? If it does - it probably is!

Complaints.

Trading schemes can be a legitimate opportunity for people to operate a business from home and are not illegal in the UK. However, there are a wide range of potentially bogus schemes which are purely designed to make money by recruiting other participants rather than trading in goods or services.

Such schemes may be subject to the Lotteries and Amusements Act 1976 for which the Home Office is responsible. The scheme must constitute a lottery to be caught by this legislation.

All schemes where money changes hands are subject to general criminal law such as theft, deceit and fraud. Enforcement of this law is the responsibility of the police.

Trading Standards authorities deal with false trade descriptions and false statements about goods/services but often such schemes do not involve either.

Under advertising legislation, the Office of Fair Trading can take action to prevent the publication of a misleading advertisement. In this regard complaints should be referred to the Advertising Standards Authority.

Trading Standards Division, 3rd Floor, Wallasey Town Hall, Brighton Street, Wallasey, Wirral CH44 8ED
Telephone: 08454 04 05 06    Fax: (0151) 691 8098
Internet World Wide Web http://www.tradingstandards.gov.uk/wirral/
Electronic Mail: tradingstandards@wirral.gov.uk