Are High Yield Investment Programs just scams?
They are most certainly a ponzi or pyramid scheme. First in, First Out is the only way to make a profit from them. You can only make a profit on the backs of investors who come in after you. There's a distinct line of consciousness that you have to cross in order to be a success at them. Ask yourself this; Can you earn profits and still sleep at night knowing that those profits came on the backs of other losing investors? Some savi HYIP scammer will have you believe that it's like stock options trading which is much the same in principle, however in options trading both sides have an equal chance at making a profit. The similarity to options trading ends at a winning and losing side and the HYIPs losing side is far greater than the winning side. Let's take a look at HYIPs and try to disect how they actually work.
According to wikipedia:
HYIP operators generally set up a website offering an "investment program" with returns as high as 45% per month or 6% a day that discloses little or no detail about the underlying management, location, or other aspects of how money is to be invested because no money is invested. They often use vague explanations, asserting little more than that they do different types of trading on various stock markets or exchanges to generate the returns they purport. The SEC has said the following on the matter: "These fraudulent schemes involve the purported issuance, trading, or use of so-called 'prime' bank, 'prime' European bank or 'prime' world bank financial instruments, or other 'high yield investment programs.' ('HYIP's) The fraud artists... seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs."
HYIPs collect large sums of money for the operators by using the classic Ponzi Scheme method of using second- and third-tier investments to pay principal and interest back to the first-tier investors. This is continued for the first several tiers, generating positive word-of-mouth advertising for the scheme using a variety of dedicated forums. HYIPs may also mirror Pyramid Schemes by offering current investors incentive commissions, for example 9% of current investment, to recruit new investors. Some HYIP promoters, aware of the negative connotations of the term, have begun to use other terms such as "HYIP game" or "HYROL" (High Yield Return On Loan) as well.
The introduction of e-currencies in the late 1990s made it easier for HYIPs to operate on the Internet and across international boundaries, and to accept large numbers of small payments. HYIPs usually accept payments only by digital currency.
Mechanics of the HYIPs
Though Ponzis and HYIP schemes have thrived and multiplied since at least the early 1900s, the combination of the Internet and Electronic Money has played an important role in the rapid growth of HYIPs in the first decade of the 21st century.
The use of digital payments systems has made it much easier for operators of such websites to accept payments from people worldwide. Electronic money systems are generally accepted by HYIP operators because they are more accessible to operators than traditional merchant accounts. Several digital currency companies responded by taking measures to discourage their system from being used for HYIPs. Some HYIP operators opened their own digital currency companies that eventually folded; these companies include Standard Reserve, OSGold, INTGold, EvoCash, Liberty Reserve, Perfect Money, V-Money. StormPay was started in the same way in 2002, but has remained in business even though the HYIP that it was created to serve was shut down by the State of Tennessee.
Some HYIPs have incorporated in countries with lax fraud laws to secure immunity from investor laws in other countries. The operators have been known to host their website with a web host that offers "anonymous hosting". They will use this website to accept transactions from participants in the scheme. The HYIP scam may also create sites which employ spamdexing or other adversarial information retrieval techniques in order to attract potential victims by creating an impression that the company has done no wrong.
-end Wikipedia
HYIPs are definately something you should avoid at all costs, literally!
| < Prev | Next > |
|---|
