Potential Participants in HYIP Forex Frauds

High Yield Investment Programs or HYIPs have become increasingly popular ways to scam people wanting to participate in the forex market. Despite numerous attempts to crack down on such frauds, they can still be found abundantly on the Internet, with their main attraction being the phenomenal rates of return that these investment schemes usually promise.

Nevertheless, the sad fact remains that the majority of these high return managed forex investment plans consist of little more than a Ponzi scheme. This type of scam typically pays investors interest or a guaranteed high return on their principal out of new investor’s fresh money.

Unwitting HYIP Fraud Participants

Most of the unwitting people that invest in HYIPs consist of retirees who want to make a higher return on their money. They are often dissatisfied with the close to zero savings rates that commercial banks currently offer or the low yields that U.S. Treasury bonds and other relatively safe investments provide.

Nevertheless, retirees are not the only people who get enticed by the relatively astronomical returns that these HYIP scams promise, and many people from all walks of life are routinely deceived by the tempting gains promised by HYIPs.

Basically, the allure of too good to be true returns continues to entice many people hoping to get paid handsomely without fully understanding the high risk they are taking with their principal payments made to HYIPs. These people are then later taken by surprise when the Ponzi scheme fails, and their money promptly disappears along with all traces of the unscrupulous scammers.

According to the U.S. Commodities Futures Trading Commission or CFTC, the average victim of a forex fraud loses $15,000. While this is a fairly large sum to place at total risk of loss, losses from sending money to HYIPs that turn out to be Ponzi schemes can be just as high or even higher depending on the initial deposit made by the unwitting investor.

In addition, many people who invest in HYIPs are given handsome incentives to get their friends and family into the so-called “investment program” that usually initially pays out some money to encourage such referrals. Of course, the damage to a referring party’s reputation can be substantial when the scheme ultimately fails and investments are lost.

Joseph P. Borg — the Director of the Alabama Securities Commission and President of North American Securities Administrators Association or NASAA — commented in an article released in 2007 by the CFTC that,

“In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists.”

Unfortunately, this aptly describes the classic Ponzi scheme HYIP forex fraud to a tee.

Willing HYIP Fraud Participants

Interestingly, some people actively seek out HYIPs, knowing full well that they are scams based on a Ponzi scheme structure. These willing HYIP participants knowingly invest their money in new HYIPs in order to enjoy the handsome gains possible from being invested at the start of the scheme.

In essence, they hope to get in and then out of the Ponzi scheme with a decent return and their invested funds before the HYIP is eventually shut down or exposed as a scam.

While these willing participants are also at risk of losing their initial investment to the scam, they knowingly risk their money for the opportunity to be the first ones to cash out with the initial high returns promised by the HYIP.

Their game plan is to avoid sharing the fate of the other less fortunate investors who get into the scheme late in the game and ultimately lose their entire investment principal after the scheme fails and stops paying.

These willing participants might even encourage others to join after them so they can receive referral commissions. Some of them even post positive reviews to HYIP and investment websites about the company and the money they have received from it.

In addition, by publicizing that they have signed up for the scam in this way, they help attract other potentially ignorant investors to put their money into the scam. They might even do this in an attempt to help increase their own chances of being able to cash out early before the Ponzi scheme fails.

As a result, these people often have more in common with the people perpetrating the fraud than with their eventual victims, especially if they disingenuously refer others to what they think is a scam. This makes them a form of co-conspirator in the Ponzi scheme as they seek to turn a quick profit for themselves at the expense of others.

Avoiding the HYIP Forex Scam Entirely

Perhaps the best way to avoid getting scammed by an HYIP is to not get involved with placing any funds with an HYIP at all. Regardless of the ridiculously high returns promised and whatever other carrots the scammer is trying to use to get marks into the Ponzi scheme, sensible investors should avoid dealing with any company that offers an unrealistic rate of return to avoid potential frauds.

Basically, if a company could really produce this kind of high return on a consistent basis, then they would be unlikely to offer their services to the public. Think about it, would you tell anyone if you actually had a way of making amazing returns of 20% per month on your money?

Furthermore, a conservative rule of thumb to follow in these matters to avoid forex frauds consists of never giving anyone else your money to trade the forex market with. Taking responsibility and learning to trade yourself usually makes much more sense in the long run than letting someone else have your money to do the same thing.

Besides, the overwhelming majority of these HYIP forex frauds keep all of the money you send them, and they only occasionally pay back some of the promised interest in order to keep their marks — aka investors — happy.

Once again, the time honored forex fraud test applies. If a forex related investment seems too good to be true, then it is probably a scam and you should steer clear of it.

Chris Lee

Share

Tweet

Safest Forex Brokers 2024

	Broker	Info	Best In	Customer Satisfaction Score
#1	Your capital is at risk Founded: 2014	Global Forex Broker	BEST SPREADS Visit broker	4.8
#2	Your capital is at risk Founded: 2006	Globally regulated broker	BEST CUSTOMER SUPPORT Visit broker	4.9
#3	* 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Founded: 2008	Global CFD Provider	Best Trading App Visit broker	5
#4	Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010	Global Forex Broker	Low minimum deposit Visit broker	4.9
#5	76% of CFD traders lose money Founded: 2007	Global CFD & FX Broker	ALL-INCLUSIVE TRADING PLATFORM Visit broker	4.9
#6	Your capital is at risk Founded: 2009, 2015 and 2017	Global Forex Broker	Low minimum deposit Visit broker	5
#7	Your capital is at risk Founded: 2006	CFD and Cryptocurrency Broker	CFD and Cryptocurrency Visit broker	5

Forex Fraud Certified Brokers

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.