High-yield investment programs
What is a high-yield investment program (HYIP)?
HYIPs use websites to offer extremely high daily, weekly or monthly rates of return. An HYIP website will have little, if any, information about the company’s location, management, or how it invests the funds it receives. HYIPs boast about passive income, secure online accounts, and exclusive investment products or savings accounts.
How does it work?
Setting up an HYIP is relatively cheap. Operators buy an internet address, design a webpage, and upload it to a server. Once it’s up-and-running on the internet, the promoters are in business. Their next step is to attract investors from all over the world.
Sophisticated HYIP sites offer savings accounts or funds that purport to invest in legitimate securities, like commodities, futures, etc. These sites may also offer online accounts with sophisticated e-commerce security, guaranteeing you safe and easy access to your money. Scammers use advertising and positive word-of-mouth through social media or HYIP-rating websites to get the word out to as many people as possible.
When you invest, you will be asked to send your money through a wire service or a online payment system. In the past, some fraudulent HYIPs have purportedly set up their own online payment systems. Once you open an account, you may receive some high-yield payments, or they might show up in your online account. As in Ponzi schemes, the operators are probably sending you other people’s money.
Watch out for one or more of these common characteristics:
- Websites that offer stocks, bonds or savings accounts with high rates of return (for example, 2% a day, 14% a week, or 48% a month)
- Online advertisements linking to a website that offers high-yield investment products or passive, high-yield savings accounts that will make you rich
- Insider tips on how you can win big in the HYIP industry
- Sites that rate HYIPs claiming to separate the real ones from the fake ones
- Postings in web forums or on social media websites purportedly from the management of the HYIP that gives technical updates, payment details, etc.
For an example of a HYIP see the Investor Communications Services Centre: Genius Funds
Research before you invest
Check our Fraud warning signs section to familiarize yourself with the language and techniques found in almost every investment scheme. There are also videos of people who talk about how they had their savings taken by a fraud artist.
Visit our Avoid investment fraud section to learn about techniques and tools you can use to protect yourself against fraudulent investment schemes and their promoters.
Report it and warn others
If you have been approached or know of an investment that fits the description above, contact your provincial securities regulator immediately.
In BC, contact BCSC Inquiries. You can also anonymously report suspicious activity through InvestRight’s Report a scam webpage.
Residents from other Canadian provinces can find contact information for their provincial securities regulator at
www.securities-administrators.ca.
If you know a person who has put money into, or is considering contributing, to an investment like the one described above, give or send them this information, and encourage them to do more research.