IRCs

I discovered something today about International Reply Coupons, or IRCs that has an interesting tie-in with one of the big news stories of the day. First, some background about what an IRC is, and why they are of interest to hams.

Although electronic systems such as the ARRL’s Logbook of The World and eqsl.cc provide a computerized way for hams to confirm contacts with each other (a contact is known as a QSO, a confirmation of that contact is a QSL), many of us still enjoy receiving a physical memento of the contact in the form of a QSL Card. Most hams have their own QSL card, which can vary from a “stock” card with the only customization being the unique callsign assigned to that ham all the way to multi-part tri-fold full-color cards. Often hams will use different QSL cards when operating from different locations, which I do when I operate from various places other than my home location. When requesting a QSL card from someone, it’s considered courteous to supply return postage, particularly if the station contacted is particularly rare or is likely to have to send out a lot of QSL cards for any reason. (There are plenty of exceptions to this, and while personally I appreciate it when someone includes return postage when requesting a card from me, I don’t usually don’t care that much if they don’t since I don’t send out that many cards that it’s a problem.)

If you’re sending a card to someone in the same country (in my case, in the US), the return postage is usually in the form of a Self-Addressed Stamped Envelope (or SASE). It gets more difficult when crossing country borders. A US stamp simply isn’t valid on an envelope coming back to me from any other country, so the options are to buy foreign stamps or to include some way for the other station to purchase the stamps in their country. I’m not going to go into all the pros and cons of the various methods (I’ll save that for another time), but it turns out that the International Postal Union (IPU) recognized this as as problem a very long time ago.

The issue originally came up unrelated to ham radio, where businesses wanted to be able to get a mail reply from someone in a foreign country. What they came up with is something called an International Reply Coupon (IRC). An IRC can be purchased from a post office in a country that’s a member of the IPU (which is most countries) for some set price, which varies by country. It can be exchanged in any other country for postage sufficient to send a letter via airmail. The price of IRCs varies from country to country, and the costs are also relative to world currency values. In some countries, it’s fairly inexpensive to purchase an IRC, while in others, it’s quite expensive. The cost for an IRC also doesn’t necessarily match the price of an airmail stamp in the country. For example, at the present time, the cost to buy an IRC from the US Postal Service is $2.10, but an airmail stamp is currently $0.94, so there’s quite a premium.

It turns out that it’s perfectly legal to purchase an IRC in a country where they are relatively cheap and to turn them in for stamps in a country where the value of the airmail postage is more than what was paid for the IRC in the first place. This is known as arbitrage and is commonly done in financial circles (though usually not specifically with IRCs). However, many hams simply use the IRCs they receive as their own form of currency, passing along a received IRC to someone else with the idea that they really just want to get that QSL card and aren’t trying to make money.

But there was someone who decided that this would be a fine way to make money quite a long time ago, and that’s where the tie-in to the news of the day begins. The person in question was Charles Ponzi, for whom the infamous Ponzi scheme was named. The articles that I’ve linked to here have a comprehensive explanation of what he did, but in a nutshell, Ponzi started off by buying relatively inexpensive IRCs in Italy and turning them in for stamps in the US, making a very significant profit. This was all legal, until he decided that he could make far more money by simply getting investors to give him cash to (in theory) buy more IRCs which would produce huge profits for the investors after the IRCs were sold. The problem is that Ponzi never actually bought or sold the IRCs, and managed to convince his investors to leave their profits with him. He told them they were making lots of money, while in reality the only one who really made money (aside from a few of his very early investors; read the articles to understand why) was Ponzi himself.

This brings us to a courtroom in New York City on the 12th of March, 2009, where Bernard Madoff pled guilty to running what will almost certainly turn out to be one of the biggest Ponzi schemes of all time, costing investors at least $50 billion.

And that’s how we get a rather convoluted link between one of the biggest swindlers of all time and ham radio.