Chain letter a scam, say authorities

A chain letter doing the rounds in Wanganui has been condemned by residents and the Commerce Commission.
The internet has turned snail-mail hoaxes into relics and the sudden drop in scam letters of the postage variety has made the few that do come through more appealing.
The David Rhodes chain letter claims that for $218 invested in the scheme you will get a return of thousands of dollars. It includes a story about the success of the letter so far and how participants will gain from it.
Wanganui chain letter stopper Tim Homes said the letters were misleading and they were illegal.
"People are wasting their time and money by doing it. For you to make any money people would have to have it sent to 250,000 homes.
"It's a farce. They will not get their money back," Mr Homes said.
"It is a pyramid scheme, where only the people at the top will get any form of decent return.
"The Inland Revenue Department will also come knocking on your door wanting tax on it," he said.
Commerce Commission communication manager Jackie Maitland said that, under the Fair Trading Act, any chain letter that asked for money was considered a pyramid scheme.
"They are illegal, and we have given warnings to 100 people involved with letters like this so far," she said.
The chances of gaining any monetary success with these scams is low, and the chances of getting caught are high, yet people continue to do it.
A Christchurch woman, who did not want to named, said she did it simply because she considered it another form of gambling.
"I already play Lotto, so why not this? I did sit on it for a few months before sending it, though.
"I did wonder if it was illegal at the time, but it said it was above board in the letter," she said.
However, she did admit the financial gain was very slow and she was still waiting to make a profit.
"It has been eight weeks since I sent out the 200 letters, at a cost of $211, and so far I have only received $100 back," she said.
Mr Homes warned all Wanganui residents to stop and think about what it means and simply not do it.
Inland Revenue Department communications adviser Kate McPherson said any income derived from participating in a chain letter was taxable, because people who took part in such a scheme were expecting to make a profit.
Meanwhile, the Western Australian government has found a use for the David Rhodes chain letter.
More than 10,000 scam letters that were seized have been recycled for use in other paper products and cardboard. Each letter also came with 5c, which was collected and turned over to the Australian Red Cross.
The David Rhodes letter has been through the United Kingdom, Australia and New Zealand.