High Yield Investment Programs (HYIPs) – Don’t Get Scammed
High Yield Investment Programs (HYIPs) are Ponzi schemes that promise passive income and high returns in short periods of time. HYIPs often involve crypto assets and rely on investors to recruit more investors. These schemes appear as if they’re operating as legitimate investments for a while, but beware! It’s only a matter of time until they collapse and disappear with your money!
How HYIPs Work
You see a video on YouTube from someone who looks like they know about investing. The person is talking about a new investment opportunity they recently discovered. In the video, the person is explaining how easy it is to get started and deposit money. The person is also showing off the amazing profits they’ve already made in this investment. It sounds like a great way to invest and make money!
You go to the website, sign up, and select an investment package. Then, the website gives you a crypto wallet address to deposit your funds into. You deposit the crypto asset and over the next few days, weeks, months, or more, you regularly log in to the website and it shows that your account balance is going up and you’re making the high returns as promised! You try withdrawing some of your funds and it works. You deposit more money and now you’re making even higher returns. Then, one day, the website tells you that it is experiencing temporary withdrawal issues. Finally, a few days later, the website is no longer online.
In reality, these are just scams. The scammers set up these websites and use social media to lure investors. They do not actually trade crypto assets or engage in any other legitimate investment activity. The account balances that investors can see on the websites are fake.
Red Flags
High returns, low risk
If the returns sound too good to be true, they probably are. HYIPs often promise low risk and very high returns on an annual, monthly, weekly, or daily basis.
Overly consistent returns
Investments tend to go up and down over time. Most HYIPs suspiciously claim to regularly generate positive returns regardless of overall market conditions.
The website is vague about how the HYIP makes money
HYIPs might use vague terms such as “arbitrage” or “trading” but rarely provide many details about how they’re able to generate such amazing returns. Many HYIPs claim to use “bots” to trade on behalf of investors.
Referral bonuses
HYIPs rely on investors to recruit new investors. So HYIPs usually have an “affiliate” or “referral” program that pays you to sign up your family and friends. The payment structure is often similar to multilevel marketing or a pyramid scheme, where you are promised a percentage of the profits of other investors that you recruit into your downline and maybe even a percentage of the profits of the investors that they recruit.
Social media promoters
HYIPs are usually heavily promoted on social media, especially on YouTube. Investors might show screenshots of how much money they’re making in a particular HYIP. You may find dozens of videos or posts from other investors, which makes the HYIP appear to be legitimate. But beware, the people that promote these HYIPs do not have your best interests in mind. They simply want to recruit you to earn a commission. Watch out for serial HYIP promoters – be very suspicious of people posting lots of videos about different HYIPs.
The people running the HYIP are a mystery
HYIPs rarely give any details about who is running the show. Scammers either conceal their identities completely or post fake names and stock photos to the website.
Crypto asset deposits/withdrawals
HYIPs usually instruct you to transfer your funds using crypto assets, such as Bitcoin or Tether (USDT).
Contact the DFPI
The DFPI urges consumers to exercise extreme caution before responding to any solicitation offering investment or financial services. To check whether an investment or financial service provider is licensed in California, consumers may contact the Department for questions or inquiries at ASK.DFPI@dfpi.ca.gov or call toll-free at (866) 275-2677. If a consumer believes a person or company has violated state law or acted improperly regarding a consumer financial product or service, they may file a formal complaint with the DFPI at https://dfpi.ca.gov/file-a-complaint/.