Today’s featured horror story is the Chain Letter Scam I Fell For. It’s a sad but true tale featuring yours truly. It’s a wee bit embarrassing but a good lesson to learn on what Not to do sometimes.
Lest you think it is all unicorns and rainbows here at Wealthvibes, I welcome you to the second edition of the Wealthvibes Money Diary. I’ve had some nice money successes in my life, but also a number of money blowups. With some of my real-life money horror stories included in my Money Diary, I could have just as easily called this series My Money Diarrhea instead. But, let’s keep it clean shall we? Or as clean as possible.
The Setup
My second money diary story begins sometime in the mid 1980’s when I was a young lad looking to strike it rich. Or maybe just looking to make some easy money. I was working in a restaurant at the time. Not exactly a recipe for wealth to say the least.
At that point in my life I was taking some classes at the local college and spending a lot of my free time in meditation, another pursuit that wasn’t going to get me rich. On the positive side, all that meditation was going to make it easier to recover from this get-rich quick chain letter scam I fell for.
Anyway, during that time in my life, I was also reading a lot. The books covered the gamut from the classics (Shakespeare, Hemingway, and Louis L’Amour) to art history to a lot of investing books. I remember Robert Allen’s No Money Down and similar works. One of my favorite books was George Clason’s 1926 classic, The Richest Man in Babylon. It really drilled home the philosophy of “pay yourself first” and save as much as you can.
Spartan Lifestyle
So, even though I wasn’t making very much money at that stage in my life, I had gotten into the habit of delayed gratification and paying myself first. In fact, I remember when I moved out of the folks house at 19 (for the second time – after a year away at college) I was so frugal that I wouldn’t spend money on a bag of Doritos. I would buy a big bag of potatoes and that was my staple that everything else worked around.
Fortunately, I had just become a vegetarian as well so my food bill was ultra cheap. Add to that the fact that I had a couple of roommates and my total living expenses were minimal. Essentially, I had squirreled away just enough money to be dangerous to myself and others. And boy was I.
The Chain Letter Arrives
When I got the letter in the mail I really thought I was headed for quick riches. And, of course, even back then I was familiar with the old saying, “If it sounds too good to be true it probably is.” But, greed has a funny way of slipping into your psyche, and convincing you that, you know, that particular saying really doesn’t apply in this case.
But just in case you aren’t familiar with the basics of the good old chain letter let me enlighten you. Or, in this case, I’ll let Wikipedia enligten you:
“A chain letter is a message that attempts to convince the recipient to make a number of copies and pass them on to a certain number of recipients. The “chain” is an exponentially growing pyramid that cannot be sustained indefinitely.”
When the chain letter first arrived I didn’t know what to make of it. It claimed you could make a fortune just by mailing the same letter to a group of others. The power would come in its viral nature as it formed a pyramid when going out to others. Apparently, I happened to be a recipient of the infamous Edward L. Green chain letter. You can see a modified copy of the one I received here.
Chain Letter Promises Easy Money
The way this thing worked was that I would pay off every member on the list with a $5 bill. I would then put my name on the bottom of a new list and mail that list out to “opportunity seekers.” The letter mentioned the insane amount of money one could make by mailing this chain letter out. The more envelopes you mailed the more you would make.
Green notes in the chain letter that if one sends out 200 letters with a 5% response rate then you should receive over $50,000. In fact, there is a editorial warning about the chain letter I received in the Los Angeles Times from 1987. At that time, the postal inspectors were receiving about 30,000 chain letter complaints a year.
The letter itself made the false claim that the entire system was completely legal and included a U.S. postal code in support of the practice. In addition to that they also mentioned a good list broker that you could use to buy the names to mail to. How nice of them.
Anyway, after getting the letter I wavered back and forth between telling anybody about it. My personality is such that I don’t like to talk about something until it actually comes to pass. So, I didn’t want to mention this great opportunity to anyone. I decided I might if it actually paid off. Then I could help my friends become rich as well. That’s just the kind of good guy I am.
Chain Letter Mistake #1 – Not Verifying the Legality
I wavered back and forth about calling the post office to see if this letter was a scam or not. That was my only real way to see if this program was really legit like the letter claimed. As there was no internet back then, I couldn’t just Google it and discover it’s legality.
After much deliberation, I decided to just go ahead and put it out there and see if it worked. I trusted that the chain letter’s claim to being legal was valid. Why would they lie? I mean they even cited a postal code regulation pointing to its legality.
So, what was the big deal and why didn’t I just make one simple phone call? Looking back, I suspect a part of me wanted this get-rich-quick chain letter scam to be legit. If I don’t make the call and discover it’s not true I don’t get my hopes dashed. At least that is what I think must have happened looking back on it. But, frankly, I can’t remember the real reason and am just mystified now as to why I would proceed without making the one simple call.
Chain Letter Mistake #2 – Not Testing with a Small Sample
When I do something, a lot of the time I like to “go big or go home.” I should have just gone home from the start with this one. Because the mailing list offered a bigger discount with the more names you bought, I decided to “save” some money and buy a bigger list. That and the fact that the more folks you mailed the more money you should make in theory. If memory serves, I believe I bought a list with over 2,000 names.
I will say once I started this whole thing I was absolutely stoked. I really imagined thousands of dollars coming my way in no time at all. With that in mind, I proceeded to purchase a couple of thousand envelopes, a sponge to moisten the flaps of the envelopes and a red pen because the letter I had received said that you would get a better response if your letter was handwritten and in red ink.
How Many Stamps Would You Like Sir?
My next step was to head over to the post office where I promptly purchased $750 worth of stamps. I don’t know what the clerk thought. Thinking about it later though I thought this whole chain letter scam thing was a great way for the post office to make money. Great for them, not so great for the participants.
Every day after work I would come home work on a batch of letters and then take them to the post office and dump them into a mail box. Honestly, it was a labor of love. Foolish love. It took me about three weeks to address and mail the letters. By the second week I was starting to receive $5 bills in the mail. Wow, I thought, I’m going to be rich.
I’m Done
I remember my feeling of elation on the day I mailed off the last of the letters. I’m finally done, I thought. Done for, was more like it. I was bubbling with excitement as I headed to my mailbox to see what new envelopes awaited me. And, lo and behold, there in the mailbox was my own personal letter from some Postal Inspector. Uh oh I thought as I opened it up. Sure enough, I was ordered to cease and desist because the activity I was engaged in was forbidden.
Really, I thought, I had to receive this letter on the day of my last mailout. Not that it mattered anyway. I was going to take a financial bath regardless. When all was said and done, I think the whole chain letter scam cost me about $1500. That and a night’s loss of sleep for that first night after receiving the letter.
It’s Easier When You Take Responsibility
But, I took my lumps, and mentally moved on as quickly as I could. One thing that has served me well over the years is the realization that you need to take responsibility for everything that happens to you in your life. In this case, that was especially easy because I could have squelched this thing from the get-go by making one phone call to the post office.
I mailed back the money I had received from the chain letter scam but that didn’t help with anyone who went after it like I did. Hopefully, no one else was quite so zealous (I can think of some other terms to use lol but I’m a firm believer in positive self-talk).
What Did I Learn from the Chain Letter Scam?
So what did I learn from the great Chain Letter scam? Well, there were definitely some lessons to be learned. Though you probably won’t come across an actual mailed chain letter any more there are probably email versions floating around. Just be on the lookout for anything similar. Also, with any program or system you are thinking about investing in or following, doing the two rules below should help you avoid major money leakage.
- Do your due diligence. With the internet this step is a lot easier. Many products have multiple reviews. Just look through a lot of them because some of them are affiliates who are looking to recomend things they might not have actually used. At the same time, with this particular chain letter, I only had to make one phone call and I didn’t do it. That still irks me to this day.
- Do a small test to see if it works. If you have an idea or a system you want to use, test it out before committing fully to it. It will save you a lot of money in the long run, especially if it turns out to not live up to its promises.
Multiple Lessons May Be Required
Now, did I learn my lesson from this chain letter debacle? I would like to say that the answer to that question was a definitive yes. However, as I begin to feature some more of my money diary stories going forward you will see that it often takes me multiple lessons (read financial beatings) to learn a lesson. That, and that greed can blind you to things that should be abundantly clear to anyone else. Oh, and if it sounds too good to be true it probably is. If anyone has another old cliche that they would like to add, go right ahead, it’s probably applicable lol.
Hope you enjoyed today’s Money Diary article at Wealthvibes. I’m here to spread those positive vibes and to occasionally bare my mortal soul. If you have any comments on today’s article I would love to hear them in the comments section below. Probably…
I hope you are enjoying a marvelous day today!
Bob K.
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Hope you’re enjoying a fantastic day today!
Bob K.
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