HYIP stands for High Yield Investment Programs and is a get rich quick scheme. HYIP's promise from 1% up to 200% a day of the total invested amount. If you invested in the 200% a day program 1$ you would get 2$ the next day, 4$ the second, 8$ on the third and so on... if you left all your money in the program without taking anything out. This method is called compounding. Of course this just doesn't work as well as written and advertised. We can categorize HYIP's into three categories:

a) Scams 80%

b) Games 15%

c) Legit 5%

SCAMS

These HYIP's are run by people who's only intention is to steal your money. Most of these scams are Ponzi schemes. Every day hundreds of new ones appear across the globe. A very famous online scam was profits4investing.com, happened in 2005. During the time of the internet fraud, their conduct resulted in $684,388.74 in losses to 9,756 victims. Money never was invested, but same as in the Ponzi scheme was used for personal use and some to pay the first investors from the money of later ones to create a false belief that the program is legitimate.

GAMES

In the United States a Ponzi Scheme is illegal, but that does not go for all the countries of the world. So some people are placing Ponzi Games to play with investors. Their explanation of the Game is accurate and promises high paying figures, but closes when a certain percentage of payouts has been reached. Usually this is about 90%. The remaining 10% go into the pockets of program owner. This means if the total invested amount into such a game is 10.000 dollars and 9.000 dollars already were paid to the previous investors the program will close. First investors will leave with a profit, those who come too late with a loss. It all is part of the game. Usually when such a period ends, a new game starts all over again.

LEGIT

Some HYIP's are legitimate, but the thing is you almost never will know and recognize whether the program is real or not. High profits in such legitimate HYIP's are possible because of forex or stocks trading, real estate, paper trading or any other means of investment with high ROI (return on investment).

SUMMARY

Growth of HYIP's is supported by human greed. Every HYIP promises a percentage or actual sum of money for each new customer you refer to the program. This creates a sea of affiliates who are trying to get a huge

underline of new referrals. At such a high amount of offered HYIP's today it is quite hard to get people interested in the program you advertise, so some have decided to split 50/50 of the percentage to their each individual referral. For example if you refer somebody who invests 100$ in the program and the administrator promises 10% for each investment of your direct referral, you get 10$. You split this 10$ in half with your referral, so you get 5$ and your referral partner the other 5$. This makes joining a new HYIP program even more tempting and getting referrals easier.

Some people join games as well as scams regardless of the results or ethics of such behavior. They play by going in and out quickly, hoping they will get a profit before the HYIP program is over. Some do succeed and make constant profit at playing such games, however by doing so, they are actually taking money from other investors and at the same time support scammers to make new HYIP schemes. As such they are no better than the scammers themselves, as they are aware to be part of the scam and still continue investing and supporting it for their own short time profit.