It might sound like a contradiction to many – HYIPs that are scams. Why? Many believe that all HYIPs are scams. I am not about to give a verdict on that. I would rather leave the judgement to you. However, it cannot be disputed that most HYIPs on the Internet are scams. There are almost always ways of telling. Some of the ways of telling a scam are listed below:
- The website promises outrageous guaranteed returns on investment
- The website offers referral commissions in order to promote the recruiting of more victims to this scam.
- The website only accepts e-gold as payment, due to the anonymity it provides. (This is not to indict e-gold)
- The website collects personal information onÂ insecure pages, including account numbers.
- There is no business address or contact phone number listed on the sites.
TheÂ question any savvy individual would ask is: “What legitimate financial company would do such things?”Whats more? Wikipedia’s description of HYIP makes it even easier to tell:
Online HYIP schemes rarely last for the long term. Overwhelming number of cases suggest that HYIPs are Ponzi schemes, in which new investors provide the cash to pay a profit to existing investors, which they typically then withdraw. This approach allows the scam to continue as long as new investors are found and/or old investors leave their money in the scheme, known as compounding (because even higher profits are promised).
The introduction of e-currencies has made it possible for HYIPs to operate on the internet and cross international boundaries, and to accept large numbers of small investments. HYIPs usually accept deposits by either e-currency, like e-gold, e-bullion and INTGold, or use specialist third party payment processors like AlertPay, SolidTrustPay, CEPTrust, TriStarMoneyChangers and StormPay. HYIPs typically offer a significant incentive commission (for example, 9% of invested funds) for members to attract and refer new investors.
Most HYIPs disclose little or no detail about the underlying management, location, or other aspects of how money is to be invested, and relatively little information (other than asserting that they do various types of trading on various stock and other exchanges) on how they actually generate the returns they purport. They are sometimes presented with some form of an emotional appeal, appeals for faith, and promises that they will help investors achieve financial freedom.
Ultimately, it is up to the investor to decide but following the guidelines above could save you some money.