I stumbled across a scheme the other day that looked an awful lot like an online version of a chain letter. Now I know this is illegal if if goes through the postal service, but since it is all online (using paypal) is it still illegal? The way they have set it up is quite good - the only way to get your name onto the list is to pay money into the person at the top of the lists paypal account, something like $5. I won't be entering it myself, but I don't really see any harm in others doing it (huge fan of personal choice) Can some of you legal buffs full me in on the legal implications? the legality of this has been bugging me for a couple of days and I can't seem to find the answer in google. Cheers, Jared.
There is a chance you won't get caught but pyramid, matrix & chain letter schemes are still illegal... even if they "sell" a nominal product like an e-book. Pyramid schemes are also against Paypal's TOS. http://www.ftc.gov/speeches/other/dvimf16.shtm "The legacy of Mr. Ponzi lives on as pyramid and Ponzi schemes continue to plague us and challenge the law enforcement community. Fortunately, in the U.S., the Federal Trade Commission is just one among many agencies that have the authority to file suit to stop this type of fraud. The Securities and Exchange Commission also pursues these schemes, obtaining injunctions against so-called "financial distribution networks" which in fact sell unregistered "securities."(7) The U.S. Department of Justice, in collaboration with investigative agencies like the FBI and the U.S. Postal Inspection Service, prosecutes pyramid schemes criminally for mail fraud, securities fraud, tax fraud, and money laundering.(8) State officials independently file cases in state court, often under specific state laws that prohibit pyramids. California defines pyramids as "endless chains" and prohibits them under its laws against illegal lotteries.(9) In a slightly different vein, Illinois classifies pyramid schemes as criminal acts of deception directed against property.(10) Some states like Georgia prohibit pyramid schemes under a statutory framework that regulates business opportunities and multilevel marketing.(11) At the Commission, we bring cases against pyramid schemes under the FTC Act, which broadly prohibits "unfair or deceptive acts or practices in or affecting commerce."(12) That Act allows the Commission to file suit in federal court and seek a variety of equitable remedies, including injunctive relief, a freeze over the defendants' assets, a receivership over the defendants' business, and redress or restitution for consumers. "
So this scheme was illegal? I personally think this is crap as people should be left to make up their own mind in regards to thes things and how they wish to proceed (most people are more than capable of analyzing risk and don't need the govt to baby them) - Not my arguement to pursue though. Would they possibly be getting away with it because it is based in, say, india or something? I bookmarked the site somewhere, but can't seem to find it. If I can I will show you it so you can tell me what you think.
The scheme is definately illegal. Tobycoke is 100% correct. The frightening thing is that people really do need protection from things like this. Not people who are internet savvy like us, but those who are the more gullible among us. Why do you think that the Nigerian scam where they tell you they have $5,000,000 that they want to share with you continues. Because people are dumb enough to believe it. As my mom says, "There's no bottom to stupid." It is probably an international site because they're harder to chase... Deena _________________________________________________________________________________ Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to create an attorney-client relationship in any way.
Sorry to go off topic but Deena's disclaimer made me laugh. Not at her personally, of course, but at the fact that a disclaimer is needed to protect yourself from being sued or even criminally prosecuted for answering a simple question. Ah, what a great country we live in.
So I'm guessing you're an attorney Deena? Perhaps you could look at the site for me (yes I found it) and tell me how they get away with it. The site is www.paysforever.com