High Yield Investment Programs, also called HYIPs are scams. They are comparable to Pyramid or Ponzi schemes meaning that the money of newer investors is used to pay the older ones and, of course, the owner of the scheme.
Some HYIPs claim to be investment companies, mainly from the UK and London specifically. Their websites look professional with glossy marketing videos, high-end social media profiles, a core team of technical and financial savvy, experienced managers.
Other operators are quite open in that they are a HYIP, stating how many days they have been operating. The interest rates they promise for different programs (from 1% to 300% a day which any person should know is ridiculous) and the number of participants (which may be true or a complete lie).
HYIP operators typically use social media to appeal to victims and create the illusion of support from many consumers. On Scamadviser.com we know a HYIP is active when we suddenly receive tens to hundreds of very positive customer reviews for a new website in one or two days. These reviews are either paid for by the HYIP site or written by small investors trying to convince others to join.
In the end, there rarely is a real company behind the HYIP scheme, although their owners try to convince visitors otherwise.
How to recognize HYIPs?
Most low-end HYIPs are set-up by one individual (called Admin) and are in general easy to recognize. They:
- Offer unsustainable high interests, often paid daily
- Which are usually guaranteed and promoted as “secure, guaranteed income”
- Require secrecy, stating they are exclusive (but are openly communicated)
- Are vague in what they actually invest (and if they do it is usually in crypto, forex or gold)
- Use technical terms or refer to fictitious software or financial instruments
However, the high-end HYIPs are more elaborate and may have an entire team working on it from developers, designers, social media experts to online marketers.
To determine if they are a scam checking of company registration papers is usually not enough. These papers (often from the UK) usually turn out to be legit but of very young companies. Checking the background of the board on Linkedin and Google Image search usually quickly shows the profiles are fake and the images used from people completely not related to the company.
Who wins? Who loses?
In the end, it is estimated that 80% of the investors lose all their money. While HYIPs are clearly scams, people keep investing in HYIPs, massively! We often get questions asking which HYIPs are safe. When we answer that none are reliable as they are all Ponzi schemes, we get denials or remarks that they are “still paying out”. The fact that the Admin of the website may at any time stop paying out is not considered relevant.
InvestorsProtect summarizes HYIPs maybe best: “HYIPs are extremely risky […] they cannot be considered as an opportunity but a gamble game. If you don’t know what you are getting into, we strongly advise you to stop."
How to get your money back from an HYIP?
That is unfortunately very often a big challenge. If you paid with a credit card of Paypal, please contact them to try to get your money back. HYIP try to get you to pay with cryptocurrencies which are difficult to trace and nearly impossible to get back. Please read our article "How to get your money back".
Sources: this article is based on a longer article posted earlier: Make 40% a month! The rise of the HYIP scams.