High-yield investment programs are scamming organizations that are used to lure investors with promises of large earnings. They require for investors to give money into a “proven system.” The language changes from company to company, thus making some high-yield investment programs seem as though they are lucrative and legit. The idea of a proven system, method, or formula is heavily enforced within the programs and they appear to be logical. However, upon further investigation, they almost 100% promise more returns on the investment than what they deliver.
Who can be a victim of high-yield investment programs?
Because these programs are persuasive and at times ideologically, they target specific audiences that are looking to make it big through investment. These types of programs generally target audiences who want to reduce the risk of investment and find ways to language their offering to give investors the false comfort of low-risk investment with almost guaranteed returns.
The general set up for the deals is that they offer a deal, a system, a program, an organization, a method, or a formula for achieving high-yield results with little work or risk from investors other than putting investment money into the system. Victims of these types of scams range from all sectors, educational levels, and economic levels because they scams utilize approaches such as relationship marketing or persuasive promotional materials that are geared as educational.
There are multiple cases of victims who have been recompensed for their losses when these companies are investigated. Generally, the companies based operations and funds in foreign counties and it is difficult to track the money once it is gone. However, there are cases were victims have been able to recover some investments after the companies are formally discovered to be fraudulent.
How high-yield investment do scams work?
These programs work through offering a deal and are generally set up like pyramid schemes where investors are encouraged to bring in “referrals” to “join” a system that is “proven” to give a return.
Let’s review these words, referrals, join, and proven to show how these scams work. The scams require that more and more people invest with them so they are looking for more people. They rely on expansion especially through referrals. This is a primary method for pyramid schemes where investors earn a percentage on new investors as they coming in, and the system is staggered like pyramid, where those at the top receive the most percentages.
Next, these systems require a person to join them and usually provide a team or pool of people, so there is a sense of multiple people being involved.
Next, these systems drive the idea that they are proven or some other rhetoric that supports this. Although the rhetoric and presentation differs, the theme and point are the same: reduced or no risk in investing. They want investors to feel like their money is safe and in good hands and that the investors don’t have to worry in the way they would with high or normal risk investment, while being insured they will receive the same amount of returns.
The promises these companies make is also a clue that they are not what they claim to be. Companies that tell investors they will see returns each day with compounded returns for people “under them” that they bring in are examples of this type of scam. Usually, these companies understand they are short lives and have elaborate exit strategies to avoid taxation or financial crimes. They usually have taken some legal measures to protect themselves and to package their program, making it seem more legitimate. Another way these companies operate is to associate themselves with large banks or to call themselves “prime” bank to give the impression that reputable institutions associate with them, thus lending them credibility. Their idea is to create an illusion of legitimacy across the internet so that when investors research them, a general search turns up little to nothing that is negative and shows the inner workings of the company.