1) Make sure they know the IRS is on to them!

2) Send them to jail.
Forward a copy of the original post to:
the Postal service - 
the IRS - 
the National Fraud Commission - 
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Chain Letters

United States Postal Inspection Service

A chain letter is a "get rich quick" scheme that promises that your
mail box will soon be stuffed full of cash if you decide to
participate. You're told you can make thousands of dollars every month
if you follow the detailed instructions in the letter.

A typical chain letter includes names and addresses of several
individuals whom you may or may not know. You are instructed to
send a certain amount of money--usually $5--to the person at the
top of the list, and then eliminate that name and add yours to
the bottom. You are then instructed to mail copies of the letter
to a few more individuals who will hopefully repeat the entire
process. The letter promises that if they follow the same procedure,
your name will gradually move to the top of the list and you'll
receive money -- lots of it.

There's at least one problem with chain letters. They're illegal
if they request money or other items of value and promise a substantial
return to the participants. Chain letters are a form of gambling,
and sending them through the mail (or delivering them in person
or by computer, but mailing money to participate) violates Title
18, United States Code, Section 1302, the Postal Lottery Statute.
(Chain letters that ask for items of minor value, like picture
postcards or recipes, may be mailed, since such items are
not things of value within the meaning of the law.)

Recently, high-tech chain letters have begun surfacing. They may
be disseminated over the Internet, or may require the copying
and mailing of computer disks rather than paper. Regardless of
what technology is used to advance the scheme, if the mail is
used at any step along the way, it is still illegal.

The main thing to remember is that a chain letter is simply a
bad investment. You certainly won't get rich. You will receive
little or no money. The few dollars you may get will probably
not be as much as you spend making and mailing copies of the chain
letter.

Chain letters don't work because the promise that all participants
in a chain letter will be winners is mathematically impossible.
Also, many people participate, but do not send money to the person
at the top of the list. Some others create a chain letter that
lists their name numerous times--in various forms with different
addressee. So, in reality, all the money in a chain is going to
one person.

Do not be fooled if the chain letter is used to sell inexpensive
reports on credit, mail order sales, mailing lists, or other topics.
The primary purpose is to take your money, not to sell information.
"Selling" a product does not ensure legality. Be doubly
suspicious if there's a claim that the U.S. Postal Service or
U.S. Postal Inspection Service has declared the letter legal.
This is said only to mislead you. Neither the Postal Service nor
Postal Inspectors give prior approval to any chain letter.

Participating in a chain letter is a losing proposition. Turn
over any chain letter you receive that asks for money or other
items of value to your local postmaster or nearest Postal Inspector.
Write on the mailing envelope of the letter or in a separate transmittal
letter, "I received this in the mail and believe it may be illegal".