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By: investexplorer.com

High Yield Investment Program.

A High Yield Investment Program, or HYIP, is a often type of pyramid scheme normally offered via the Internet. HYIPs typically accept deposits as low as $1 while promising astoundingly high returns.

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 (often because money is not actually 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.

Arguably, the largest HYIP scam that has existed on the internet was PIPS (People in Profit System or Pure Investors. The investment scheme was started by Bryan Marsden in early 2004, (according to the Wayback Machine record of http://pureinvestor.com) and spanned more than 20 countries. PIPS was investigated by Bank Negara Malaysia in 2005 which resulted in Marsden and his wife being charged in a Malaysian court with 97 counts of money laundering involving more than RM77 million - US$20 million - (copy of New Straits Times article dated 11 Oct 2006). Even after these charges were brought forth many of Marsden's followers/investors continued to support him and believe they would see their money some day. This behavior and denial could be seen and still is seen on hyip forums such as Talkgold Forum and others.

Interest rates
HYIPs typically claim to offer interest rates of 1% or more per day on invested funds; some claim to offer much higher daily rates exceeding 200% a day. Allegedly, the highest-return HYIP on record has offered 1,100% ROI in one day. Claims of astronomical returns without large capital outlay or background information are indicative of a Ponzi-structured HYIP program.

As a comparison with a typical 1% per day claim, Warren Buffett, one of the world's most successful investors, made around 30% per year during his most successful period; that is on average, less than 0.1% per day. As the claimed returns of 1% per day are extremely unlikely to be produced legitimately, all HYIPs are therefore likely to be Ponzi schemes, and so most investors will in due course lose their money.

HYIP games.
As a result of online forums and monitoring sites which have made HYIP investors more aware of their nature, a different sort of "honest" HYIP began springing up in the early months of 2006. Basically, the HYIP owner calls his or her program a "ponzi-structured game" where one should "not invest money one cannot afford to lose", and where there is "never a guarantee of earnings or refunds". They promise to pay out up to (for example) 95% of deposits, the rest going to hosting or other fees and the owner's profit.

In such "games", the first participants ("investors") may make a good profit and are encouraged to refer other people to the program because of referral commission, the fact that they have already made back their principal and are playing with profit, and that the more people who deposit money, the more money can be paid out to participants. In theory, strategies can be developed to maximize profit using these games (but, of course, since this is a zero-sum game, such strategies work by taking advantage of ignorance or errors by others). Some forum users may gain a reputation whereby others will trust their word that they have been able to withdraw their profits, encouraging others to invest in the hopes that more will invest after them and that they can therefore make a profit. As these games are by definition Ponzi schemes, it is inevitable that the vast majority of investors who are not at the top of the pyramid will lose their money.

These "games" might be considered as lotteries. However, the odds of winning cannot be determined, as one cannot know whether one is playing early enough to win money (that is, whether a sufficient number of new participants will follow). Thus, these activities are unlike a lottery or other forms of gambling, where a player has an equal chance of winning no matter when a ticket is bought, or where the odds of the game are known.

HYIP monitors.
HYIP monitors, or HYIP listing/rating sites, are websites that list and/or promote HYIPs for referral commissions. The monitor charges each HYIP a listing fee which is usually then invested into that program, although there exist free listings and occasionally monitors which invest their own money. The monitor then labels the HYIP as "Paying" or "Not paying/Scam" depending on whether interest is received within the terms specified by the program. Monitors also allow other HYIP investors to rate and comment on the programs, based on factors such as promptness of payouts and responsiveness of the HYIP administrator. Programs with higher ratings achieve higher rankings on the monitor sites, which coupled with a "Paying" status may entice more investors who rely on the monitor.

In most cases, HYIPs only pay monitor sites to keep their "Paying" status visible, but do not pay other investors. As HYIP monitors are not affiliated with the HYIPs themselves, they are unable to prevent investors from being scammed; they neither help to recover lost funds nor track down the scammers. Promoting or perpetuating Ponzi schemes is a criminal offense punishable by jail terms or fines in most countries. That the monitor sites place disclaimers saying that they "do not promote the programs advertised on their website" does not absolve them from criminal liability.

In order to generate a "paying" status early (so that future visitors will see it) and maintain it for the longest possible time, newly opened HYIPs list their site quickly as well as constantly pay monitors their interest on time. Added to the fact that many monitors invest the listing "fee", and that a commission is received on each deposit made by people who visit the HYIP via the monitor, they are the most likely to profit when a program runs out of funds.

HYIP owners can manipulate monitors and forums, by paying people to comment positively or by using a range of IP addresses or proxy servers in different locations so that "paying" votes appear to come from around the world. This allows the HYIP to rise up the rankings more quickly than others, giving investors a false sense of security. Additionally, even if they know it will scam in the future, some investors will also rate new HYIPs positively until the HYIP stops paying, because they want more people to invest after them in the hopes that the program will last longer. Future scammers can also build up a good reputation on forums for a large payoff once most forum members trust them.
For example InvestExplorer.com

REFERRALS.
After registration user account on hyip - you get 'referral link' - the link by which you can invite other users to take part in business for additional percents.
Hyips... another financial industry via Internet.

Author – InvestExplorer
Our aim is to offer people InvestExplorer.com, InvestExplorer.com is High Yield Investment Program (HYIP) rating and monitor website, provides HYIP list, HYIP Forum, HYIP tools, HYIP Ads, FREE HYIP Info.

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