As summer vacation nears, Betty unwittingly makes an enemy of Paula Rimo, a rich, selfish girl who has become friends with Ada Nansen. Paula taunts Betty during class one day, and Betty slaps her. Paula fingers a small switchblade that she keeps on a necklace. Betty forgets about the incident, little realizing that Paula has vowed revenge.

During summer vacation, Betty and Bob visit the Guerin family and Bramble Farm. In a brief confrontation with Mr. Peabody, Betty forces Mr. Peabody to do something that will help make Mrs. Peabody's life easier. Betty and Bob go to Washington while Uncle Dick travels to Mexico on oil business.

While in Washington, Betty receives a telegram from Uncle Dick requesting that she leave immediately for Mexico. Bob feels that there is something strange about the telegram, but Betty won't listen. Bob has no choice but to accompany Betty to Mexico.

Once in Mexico, Betty and Bob are met by a Mexican and are led on horseback through rural terrain. Too late, Betty and Bob realize that the telegram from Uncle Dick was a ruse, and Betty regrets not listening to Bob's advice. Unexpectedly, Betty comes face to face with Paula Rimo and must use all of her wits to outsmart her vicious school rival.