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Are All HYIP Scams?
First what are HYIP's? HYIP stands for High Yield Income Program and most are "passive" (passive meaning that you are not required to referral or sell products/services in order to earn income). Being that they are "passive" programs, most HYIP's are also not consider MLM programs (MLM stands for Multi Level Marketing), as MLM programs mostly work off a matrix system and HYIP's do not.
Now there are some HYIP's that also combine MLM into their programs. Example- ProfitClicking which is both "passive" and pays commissions from a two level matrix system, but this is the exception to the normal rule of HYIP's.
What are scams? Just because you might lose money in a online program DOES NOT automatically mean that the program was a "scam". If this was the case then you would also have to believe that the stock market, bond market, and/or commodity exchanges are also "scams", as people lose money in these everyday.
Here is my definition of what I would consider a "scam". Anytime you are GUARANTEED something and nether you or anybody else NEVER receives what was guaranteed, being it earnings, referrals, traffic, etc., then I consider this a "scam". And these can be any type program or business.
Luckily only 10 to 20 percent of all online income opportunities can be consider "SCAMS". And most true "scam" programs never last more that 60 days, because when members start asking for their earnings, the program owner(s) will close down the web site and disappear with all the members money. The exception are the traffic or referrals for money "scams", as there is always new people willing to but money into them wanting either more traffic or referrals for their MLM program. An example of this would be the All Inclusive Ads "scam" or GDI Coop "scam" which are both still going on.
So if most HYIP's are not "scams", then why do so many people lose money on them? This is because over 70 to 80 percent are "ponzi schemes". A "ponzi" is a program that actually makes no money from investments, advertising, products, etc., but instead pays its members with the money that it receives from new members. In a "ponzi" program usually the members that are first in, make money and the members that are unluckily last in, lose money. Most "ponzi schemes" only last 6 months to one year before disappearing.
How do I know if a HYIP is a ponzi scheme or scam? It is almost impossible to know if a HYIP is a ponzi or scam, as basically only the program owner(s) know for sure. And of course they will not tell you if it is, as they are planning of making money from the scheme.
But here are some of the things that I look at before I invest into a HYIP;
- If the HYIP guarantees a set daily earning percentage and they are stating that their earning are from a stock/bond market or commodity exchange, then I consider this a RED flag. As no stock/bond market or commodities exchange pay out a set daily earnings percentage. Some days they will make money and some days they lose money. And a "legit" HYIP should reflect this, like the EurEx Trade HYIP does.
- If the HYIP states that it is doing business in the US, yet does not follow the US IRS law by providing its US members a 1099 statement of yearly earnings, then I consider this a RED flag. If the HYIP is actually planning on staying in business for more that a year or two, than why would they risk all their US members and business being shut down by the US government?
- If the HYIP has been online less than 12 months, then I consider this a RED flag. Remember most HYIP "scams" only last approximately 60 days and most HYIP "ponzi schemes" only last 6 months to a year.
- If the HYIP address and company cannot be verified, then I consider this a RED flag. Real HYIP companies do not have any reason to hid their identities from their members.
- Check to see if the HYIP owners have been the owners of other past HYIP "ponzi schemes", that have disappeared. If they have then I consider this a RED flag. The chances are very good that their new HYIP is also a "ponzi scheme"
- If the HYIP has a large minimum withdraw amount or will not allow you to withdraw your earnings in a timely matter, then I consider this a RED flag. Example, if the minimum withdraw amount is over $150 or you are not allowed to withdraw any of your earns for months on end, then the HYIP owners are trying to keep most of the money in the program to be able to keep the program "afloat" and probability not earning money from investments, as they state on their web site.
The following are the only "passive" HYIP's that I have found, to date, that have passed most of these tests:
Now a HYIP can pass all of my tests above and still be a "ponzi". ZeekRewards passed all of these tests and still ended up becoming a "ponzi scheme". So if the HYIP you are interest in passes all my tests and you decide you want to invest money into it, you should follow these steps to help you keep from losing your money, in case it does turn out to be a "ponzi scheme".
Never invest any money into a HYIP that you can not afford to lose. Remember all HYIP's have "high risk" just like the stock exchange, bond market, and commodity exchange.Always check that the HYIP you are interested in is still "paying" it members, before you join.
- You can check on HYIP's by going to sites like - http://www.hyipcore.com/ , http://www.hyip.com/ and http://www.hyipoke.com/.
- Always make it your first priority to withdraw your original investment money as soon as possible, and reinvest only your profits. This is how you can help protect your original investment. It is much safer to invest HYIP "house" money then yours.
- Never invest more the $500 into any HYIP. It is much easier to earn $500 back than lets say $5,000.Never reinvest more than 75% of your profits
- Always try to withdraw the remaining 25% back into your payment processor. Remember it is almost always the "greedy" members that get "burnt" in HYIP of programs.
I hope this posting about HYIP's helps you.
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