Internet Investments : Easy Profits or Easy Losts ?
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.
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This is What a Hyip Is and Isn’t
High Yield Investment Plans occupy a section of the financial markets that reside in a murky, shadowy corner. Not many people know what they are, and those that have heard of them are probably convinced that they’re dishonest (they may be right). Let’s see if I can clarify some of the mystery surrounding HYIP’s
HYIP is an acronym that covers a lot of financial territory. It has, in the past, conveyed the idea of an investment vehicle offering a high rate of return along with increased volatility and risk.
Some investigators believe that the majority of HYIPs are Ponzi schemes, in which new participants provide the cash to pay a profit into existing investors’ accounts.
The problem now is that HYIP’s have evolved into “business opportunities” of dubious quality and honesty. Generally now a HYIP is run offshore from the U.S. and therefore not legally bound by U.S. financial laws and regulations. In fact, they are nothing more than a web page with an email address. The web site will show some successful looking men and women involved with the world of high finance along with some articulate words about how you too can participate. Some HYIP’s suggest incredible returns on your money; even promising a “guaranteed” return of 1% – 2% a day or even up to 300% – 400% a month.
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What is the Difference between a Ponzi and a HYIP?
Online HYIPs rarely provide information to their investors of what is done with their money. This makes it easy for fraudulent programs to succeed. Dishonest organizers can set up a website to look like the other HYIPs available on the net, wait for investors to place their money in their hand and then stop the activity and walk away with the cash.
Ponzi is a fraudulent method which works as a pyramid. In such schemes, profit is not made by successful economic investment, but by appealing to new investors and using their investment money to pay existing members. This is all very well and good while the system has a steady stream of new members investing into it but once a slow period is hit, the investments will stop coming in and the whole system will collapse. Sometimes the system organizers do not wait until this has happened and may just cease what they are doing and keep the money which had been invested. Often the investors do not become aware of this until they stop receiving their interest payments as promised.
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