HYIPs - (High Yield Investment Programs)

Popular Internet Ponzi Schemes

Since the rise of the Information Age, ponzi schemes have adapted to a very popular internet model known as High Yield Investment Programs, normally abbreviated "HYIPs."

The standard HYIP is represented in the form of a website with a basic template and vague explanations of the program's investment operations, special abilities, future goals, and administrative / owner detail. There is usually no real (or deceptive) form of any proof of legitimacy on the website.

The vast majority of HYIPs allow people to create simple "member accounts" and then fund their "investment" accounts with internet payment processors. Some popular payment processor options are AlertPay, Liberty Reserve, E-gold, and SolidTrustpay. The most popular payment processor on the internet, Paypal, is rarely (if ever) used because of it's rules against providing services to such shady programs.

Notice that these HYIP programs are referred to "investments;" however, this is technically incorrect since an actual "investment" involves an exchange of securities. HYIP members simply deposit funds with an unregistered program and/or individual and hope and pray that the program's operators are truly investing in something unique, long-term, and profitable.

However, well over 99% of internet HYIPs are nothing more than basic ponzi schemes hidden by a website infested with lies and deception.

The HYIP Industry

Despite their obvious dangers and instability, HYIPs have become quite popular among internet "money making" communities and are discussed among several forums, blogs, etc. Although most HYIP participants are novices or "first timers," several individuals repeatedly risk their own money in multiple HYIP ventures. These participants consider the database of HYIPs and its related communities an "industry."

These experienced HYIP industry players usually agree that most (if not all) HYIPs are scams, but they also argue that "investing" in these random HYIPs is acceptable as long as they understand and accept the high risk. However, due to the fact that well over 99% of HYIPs follow a strict ponzi scheme model that is always unstable and must ultimately collapse, these HYIP industry players are not "investing;" rather, they are gambling. Most HYIP veterans even admit that extensive knowledge of HYIP properties can only help someone to small degree in such a risky industry, and the individual might as well be playing blackjack or poker in a casino.

HYIP industry gamblers ("players") are also very hesitant to address the unfortunate, inevitable results of the ponzi schemes they play. The aftermath of a ponzi scheme always involves more empty-handed, robbed "investors" than members in profit. The major HYIP players only perpetuate the scam, allowing the lifespan of the program and the total number of victims to increase. When asked how they feel about this dark effect of ponzi schemes' aftermath on unsuspecting HYIP novices, most industry players justify their involvement with careless statements such as - "They assumed the risk and have no reason to complain" or "If they were new to this industry, they should have researched HYIPs more carefully."

Reality of the HYIP Industry - Even the most knowledgeable industry players tend to lose or break-even on average. The fortune of earning a profit from the HYIP industry is usually not the result of experience but sheer luck. Any and all HYIP "investing" is nothing more than gambling, despite anything industry players will claim.

Classification of HYIPs

Blatant (aka "Naked" or "Obvious") Ponzi Schemes

Blatant Ponzi Schemes account for most HYIPs you will see listed on internet websites and forums communities. They usually have several of the following characteristics:

Poor website design and/or quality
Poor grammar and multiple typos in the website's content
Uniform database from a common script
Ridiculous, high ROI ranging anywhere from 5-10% ROI or even 1000% in one day
Little to no information about how financial gains are accumulated

Most Blatant Ponzi Schemes are run by "Serial Scammers," people who create several HYIPs every month to continually steal a few hundred (or thousand) dollars per program in the industry. The average lifespan of a Blatant Ponzi Scheme is less than 2 weeks, and most never have the chance payout a fraction of the promised percentage to even a quarter of their participants.

Take note - These pitiful HYIPs are everywhere! Due to the release of "Goldcoders" and similar systems, even an immature novice can purchase a basic HYIP website script for under $100 and immediately set up a Blatant Ponzi scheme. 20 to 30 of these scams may be created in a single day! Be on your guard.

Long-Term Ponzi Schemes

These programs may have one or more of the previously listed characteristics of a Blatant Ponzi Scheme, but a typical Long-Term Ponzi has a more professional look and feel overall. They can usually accredit their longer lifespan to:

A unique theme and marketing concept
Strong support team
Somewhat lower, reasonable investment returns (compared to blatant ponzi schemes)
Exponential outreach through a respectable and motivating referral program
A growing sense of infallibility and blind faith (ultimately resulting from greed) among the specific HYIP's community.

In many cases, the participants of a Long-Term Ponzi Scheme view the program's administrator or CEO as an idol, i.e. someone who "always has the member's best interests in mind" or is "incapable of scamming." Blind, emotional faith is a major contributing factor to the success of these scams.

Long-Term Ponzi Schemes may last only a couple months, but they can last as long as several years. Some of these programs grow so wide and popular that their history can still be found online. A few examples would include: PIPS, Solid Investment, CEP (ColonEndParentheses), A3 Union, and M-Investment.

Autosurfs

Many HYIP industry players consider "Autosurfs" to represent an entirely different category of internet programs, as opposed to yet another "division of HYIPs." However, the Autosurf concept is essentially the same as an internet HYIP program with a "website advertising" twist.

Autosurf programs promise a high rate of return to members for viewing a certain amount of websites in each day. Members can only receive this high rate of return on advertising packages purchased. Therefore, the concept of "investments" in HYIPs is usually replaced by the term "advertising packages" or "credits" in Autosurfs. The high returns (often called "rebates") are paid out through future members' upgrades and therefore constantly require new members and new investments for the program to survive. As with all divisions of ponzi schemes, Autosurfs are also doomed to collapse at some point in time.

Autosurfs may last only a few weeks or survive for a couple years, similar to Long-Term Ponzi Schemes. Some examples of large Autosurfs of the past would include: 12 Daily Pro (Admin: Charis Johnson), Studio Traffic, Tri-Star Media (Admin: Bob Krimm), and Ad Cash Daily / ASD (Admin/CEO: Andy Bowdoin).

--- For a full case study of a recent popular Autosurf that was shut down by the U.S. Government in late 2008, read our article about Andy Bowdoin's Ad Cash Daily / ASD.

Legitimate HYIPs

After all the internet garbage infested with ponzi schemes is appropriately divided, believe it or not, legitimate HYIPs actually do exist.

However, please take note: It is very rare - and the word "VERY" must be stressed here - to find a legitimate HYIP that is truly investing in something worthwhile. Most Legitimate HYIPs are private and concealed from the public eye, because programs offering such high rates are only interested in finding large, serious investors.

When an "investor" believes he has discovered a Legitimate HYIP, he has typically only joined the supporting crowd of a clever Long-term or Sophisticated Ponzi Scheme. Most, if not all Long-term Ponzis originally come across as Legitimate programs and fool their members into believing the same.

BEWARE - If you seek out Legitimate HYIPs, realize that you are treading on a minefield. Exercise extreme caution!

All forms of ponzi schemes are usually very vague about their investments and abilities to produce such high returns. Remember that the burden of proof lies with the company or program, NOT the participant! If the company fails to provide sufficient evidence that their investing activities are legitimate, participating is highly discouraged.

When conducting your research, be careful to ignore the poor logic of Industry players. Examples can be found here.

Announcements:

PonziSchemeAlert.com urges all victims of Nick Smirnow and his Pathway 2 Prosperity scam (P2P) to complete the "Victim Questionnaire" and forward it to the Ontario Authorities if they have not done so already. Additional information can be found HERE.