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The Investigation
After every major program collapse, there is the inevitable ‘investigation’ that will be conducted by some well-to-do investor. At first real progress will be seen, they will find out that the program was a ponzi, the e-gold accounts will have been frozen, and they will be on the money trail.
With this news, the investigator will probably hit a brick wall and claim to need more money to continue. Given the success of his investigation so far, many people are likely to give him some more money to continue. Generally these investigations end without the expected outcome.
Basically, if you pay someone else to do the investigation, you are throwing good money after bad. The guy will either fail to find the scammer because of lack of resources, or he’ll say thank you very much and take the money.
A lot of people will suggest that you contact the authorities, and they will provide hundreds of links to people you can contact. In our opinion this is possibly the worst thing you can do, it’s like biting off the hand that feeds you! If the authorities get too many complaints, they will slowly crack down on this arena, and HYIP’s will be over for good. Learn from your mistakes, write your money off as a bad investment, and move on. Don’t throw more money at it!
Christmas Time
Q. What do you get more of at Christmas time than at any other time of the year?
A. Hundreds of small Christmas scams with names like "Santa’s sack of gold" or "Snowmans Surprise". They promise huge returns (1000%+) in a short space of time and promise to make you rich in time for Christmas. What actually happens is that the owners of these programs get to eat Turkey in Hawaii, and you get to eat scraps of chicken from the bins of KFC.
Don’t do it! Keep your e-currency purse tightly shut over the Christmas period. You’ll be very glad that you did!
Another thing to be careful of over the Christmas period is watch that ponzi of yours that you’ve been in since September of that year. Christmas is the favorite time for ponzi’s to fail as people are spending less money on investments and more on presents for the family. Therefore the program cannot sustain itself over the Christmas period.
Also, all experienced players know this, so they start withdrawing their investments in the run up to Christmas… even less funds are now available.
DDoS Attacks
If you have been in the HYIP arena for any amount of time, you can’t have failed to have heard of a program being targeted for a DDOS attack. But so many people don’t know what a DDOS attack is and how it can affect a HYIP.
Several years ago, the worst nightmare for a HYIP admin was that someone was going to launch a 'spam attack' on their website. This meant that the attacker would send out millions of unsolicited emails pretending to be from the admin of that program. The emails would look like they originated from the programs server and more often than not the site would be blacklisted and taken offline.
Eventually though, this attack became ineffective because it was easy to prove that the site admin was not the originator of the spam.
Fast forward to the present date and although spam attacks are something to be cautious about, a new method of destroying HYIP's has emerged. This is called Distributed Denial of Service or DDoS for short. The way it works is incredibly simple.
Firstly, an attacker gains control of an unprotected PC by getting the user to download a virus or trojan horse. The user might not even know that they have installed this on their PC because it might come bundled with some software, downloaded from a p2p network or installed automatically by their browser.
Second, once the attacker has built up a network of infected computers (referred to as 'zombies' because they lay dormant until activated) that he can remotely control, he sends a signal for them all to simultaneously 'ping' a server IP or domain. You can see how easy this method is for yourself by doing the following on any Windows OS:
1. Start --> Programs --> Accessories --> Command Prompt
2. In the command prompt window, type: ping www.merchantku.com
3. Your computer will send a packet of information to the merchantku.com server which basically says, "hello, anybody there?". It is a basic computer protocol that the other machine must reply to this message if it is able to.
Now imagine thousands of computers repeating the above process every second. That's 32 bytes of information from say 10,000 computers every second, or 312 MB/s of data that the server must respond to. Eventually the server will overload and it cannot process anything else, effectively blocking access to all the sites to legitimate users.
The above process is a DDoS attack. By itself a server cannot deal with this attack, the server needs expensive hardware and software firewalls to filter the hundreds of illegitimate IP's of the attack and real people on hand to actively filter the IP's that the firewalls miss.
The above process is very expensive and only offered by extremely specialised hosting companies such as http://www.blockdos.net. Expect to pay at least $500 monthly for this service. It’s a very good sign when a HYIP invests in this kind of protection because you know that the admin is serious about his (or her) program. If your due diligence uncovers a HYIP that is using this service then take a long look at what the program is offering.
To make sure you are not contributing to a DDoS attack, you should use a hardware firewall router from netgear.com or linksys.com (they are both a doddle to set up if you have an DSL or broadband connection. It’s as simple as plugging in, switching on and installing the software) and a software firewall from zonealarm.com. These block incoming and outgoing traffic on all ports unless you specifically allow it.
Don’t worry if you don’t know what a ‘port’ is, and don’t be concerned that the router will stop your internet from working, all the common ports for surfing and sending email are open and not blocked. The great thing about a router and firewall is that you can block specific type of websites which is a great tool for parental controls.
If you find that your favourite HYIP website is not available, consider the possibility that it is under a DDoS attack. Recently various extortion gangs have been going around threatening new HYIPs with DDoS attacks if the admin doesn't pay them $500 in e-gold. The inexperienced admins may bow to this threat and pay the extortionists the money. Experienced admin's know that the threat is either a hoax, or if they do pay them, they will be back again asking for more money.
If you run a HYIP related site, such as a rating and monitoring website and you receive a DDoS blackmail attempt, simply ignore the email. Don't reply and certainly don't pay the extortionists. 99% of the time they are bluffing hoping to catch out some inexperienced person. If they do DDoS your site, eventually they will move on to another site. Just weather the storm and sit tight.
Here’s an overview of some of the bigger HYIP’s over the last 3 years:
April 2002:
Name: TMA (The Mighty Acorn)
URL: Unknown Payout: Averaged 0.5%/Day Compounded
Warning Sign(s): Payment problems, DDoS, admin lies
Closed: January 2004
Duration: 21 Months
June 2002:
Name: EZ-Bucks
URL: http://www.ez-bucks.co.uk Payout: 2% Daily
Warning Sign(s): Introduction of new monthly programs
Closed: December 2002
Duration: 7 Months
Name: Pecunia Club
URL: Unknown Payout: 40-60% Every 5 weeks
Warning Sign(s): Payment problems for several weeks
Closed: June 2003
Duration: 12 Months
September 2002:
Name: Get Weekly Profit
URL: http://www.get-wp.com Payout: 7% Weekly Compounded
Warning Sign(s): Payment problems spanning several weeks
Closed: February 2004
Duration: 17 Months
Name: VBU
URL: Unknown Payout: Variable Weekly (averaged 10%)
Warning Sign(s): Weekly returns were declining to 0.5% weekly
Closed: August 2003
Duration: 11 Months
October 2002:
Name: Star Game
URL: http://www.star-game.com Payout: 1% Daily Compounded
Warning Sign(s): Payment problems, DDoS, admin lies
Closed: January 2003
Duration: 15 Months
November 2002:
Name: GoldEarners.com
URL: http://www.goldearnes.com Info: GoldEarners.com was one of the first independent rating sites in HYIP.
December 2002:
Name: Pegasus Investments
URL: http://www.pegasus-investments.com Payout: 1.43% Daily Compounded
Warning Sign(s): Payment problems, DDoS, admin lies
Closed: January 2003
Duration: 13 Months
January 2003:
Name: TalkGold
URL: http://www.talkgold.com Info: TalkGold was one of the first HYIP related forums. It has gone on to become the most popular and successful HYIP forum of all time.
Name: Bonded Investing
URL: http://www.bonded-investing.com Payout: 0.5-3% Mon-Fri (averaged 1%)
Warning Sign(s): Payment problems
Closed: April 2004
Duration: 13 Months
Name: Players Edge
URL: N/A Payout: 25% profit every 10 days
Warning Sign(s): None, simply disappeared
Closed: October 2003
Duration: 9 Months
February 2003:
Name: Hi Fi Gold
URL: http://www.hifigold.com Payout: 2% Daily & 1% Daily Referral Commission
Warning Sign(s): Withdrawals no longer being processed
Closed: May 2004
Duration: 3 Months
Name: DDUC
URL: http://www.ddu-c.com Info: The DDUC is a result of the failed investigation into EZ-Bucks. DDUC aims to provide a better and cleaner HYIP world by verifying admin contact details.
March 2003:
Name: Weekly Gold
URL: http://www.weeklygold.com Payout: Variable Weekly (averaged 5%)
Warning Sign(s): Withdrawals no longer being processed
Closed: January 2004
Duration: 10 Months
Name: TIG (The Investors Group)
URL: http://www.theinvestorsgroup.com Payout: 1.75% Daily
Warning Sign(s): Closed for ‘website upgrades’
Closed: July 2003
Duration: 4 Months
Name: Aussie Gold
URL: http://www.ausgold.com Payout: Variable Weekly (averaged
Warning Sign(s): None, the admin closed the site
Closed: October 2004
Duration: 7 Months
Name: Brideby
URL: http://www.brideby.com Payout: 2.2% Daily & 1.1% Daily Referral
Warning Sign(s): Withdrawals no longer being processed
Closed: November 2004
Duration: 8 Months
April 2003
Name: Octavian Holdings
URL: http://www.octavian-holdings.com Payout: 5-15% Variable Weekly (averaged 7%)
Warning Sign(s): All deposits were refunded and the program was ‘restarted’. It then paid out increasing rates before stopping
Closed: July 2004
Duration: 15 Months
Name: Comshares
URL: http://www.comshares.com Payout: Variable daily (inc. negative interest) averaged 30% in the beginning, reduced to 10% over time.
Warning Sign(s): Slowly diminishing returns as the program got older. Massive loss announced of 99% of trading funds, program carried on for a few months, then ran into problems again
Closed: September 2004
Duration: 17 Months
September 2003
Name: Managed Returns
URL: Not Available, Yahoo Group Payout: Variable 8-14% Weekly (averaged 10% weekly)
Warning Sign(s): Non given, simply stopped
Closed: August 2004
Duration: 10 Months
Name: Foreign Fund
URL: http://www.foriegnfund.com , http://www.ff-bank.com Payout: Variable 8-14% Weekly (averaged 10% weekly)
Warning Sign(s): Non given, simply stopped
Closed: August 2004
Duration: 10 Months
October 2003
Name: CPU Investments
URL: http://www.cpu-investments.com Payout: 0.6% Daily & 0.2% Daily Referral
Warning Sign(s): Stopped to upgrade script, never returned
Closed: July 2004
Duration: 9 Months
January 2004:
Info: Due to high dependence on Nova Lights, many smaller programs shut down.
Name: S&S Investments
URL: http://www.ss-investments.com Payout: 115% Weekly
Warning Sign(s): Withdrawals no longer being processed
Closed: April 2004
Duration: 3 Months
Name: FLO (Free Land Opportunity)
URL: http://www.freelandopps.com Payout: 110% Weekly to 190% Monthly
Warning Sign(s): Cult behavior on the forum, moderated and censored forum, various problems, limiting withdrawals.
Closed: August 2004
Duration: 7 Months
March 2004
Name: PIPS
URL: http://www.pipsinc.com Payout: 1.9% per trading day
Warning Sign(s): Cult behavior on the forum, moderated and censored forum, various website problems, dropping e-gold.
Closed: June 2005
Duration: 15 Months
July 2004
Name: Reality Millions
URL: http://www.realitymillions.com Payout: Variable depending on length of investment 12% - 25% per month
Warning Sign(s): Cult behavior on the forum, moderated and censored forum, various website problems, dropping e-gold.
Closed: Still Open At Time of Going to Press
Duration: 10 Months
November 2004
Name: IT4US (International Trading)
URL: http://www.it4us.net Payout: Variable – main investment plan is 250% per month
Warning Sign(s): Cult behavior on the forum, moderated and censored forum, payouts falling behind.
Closed: May 2005
Duration: 7 Months
January 2005
Name: Fast Market
URL: http://www.fastmarket.com Payout: Between 0.5% and 3.2% every trading day
Warning Sign(s): None yet.
Closed: Still Open At Time of Going to Press
Duration: 11 Months
You should notice that the amount of big HYIP’s that have been launched is slowly declining. It peaked in 2003, and has decreased ever since.
One of the main reasons for this is the advent of the ‘cookie cutter’ websites using scripts from abcHYIP.com and GoldCoders.com. For just $150, these sites let anybody run their own ‘hyip’. These last less than 3 months and are usually designed to make the owner a quick buck.
Classic Ponzi Stories
If there’s one thing that you learn from this arena, it’s that most of these programs are 2-bit scams run by stupid and desperate people. So stupid in fact, that they can’t make up anything new and original to sell their program. These programs should be the ones that you avoid like the plague. The programs with admins that put a bit of effort into marketing and selling their site that you should be looking for.
There are some stories, words and phrases that you will hear again and again that might as well be substituted for a massive neon ‘PONZI’ sign, because that’s basically what they are telling you.
Here are some key phrases that every ponzi will use:
1. • We invest your money into forex, nasdaq and various funds and activities
2. • Money generated from these investments are used to back up your investments
3. • To make this opportunity available to everyone, we have set a minimum of just $1
4. • We accept e-Gold as a method of payment, and will look to add bank wires at a later date
5. • Because of this, we can guarantee your investments
1. • There is no risk when you invest with us
2. • We have hired several traders to trade for us
Not only do these ponzis use the same words / phrases / scripts over and over again, they also use the same stories over and over again. Here are the top stories used when a program is preparing to run with your money:
1. • They announce that they are going to go private on a set date. This date is almost certainly the date that they will disappear.
2. • They announce that they will form a real offline bank. I’ve lost count how many ponzis have said that they will form a bank, and then run.
3. • They decrease the minimum and increase the maximum, while also increasing the rate of return. This is a sure sign that the program is running out of funds and needs to soak up every last dime from the suckers…err, investors. As soon as something significant changes in a programs setup, then it’s a sure sign that there’s trouble behind the scenes
4. • The site appears ‘offline’ and they announce that it’s been hacked/upgraded/ddos’ed. This is a sure sign that they have gone and flown the nest. Your money is gone, no matter how many updates they make promising to return
5. • They introduce a new, higher paying program with a larger minimum and longer payout duration (usually a month or more). This is a sure sign that there is a money flow problem and they are trying to squeeze every last penny before they run.
6. • Suddenly, for no reason, the interest payments stop, or withdrawal requests are no longer honored. If this is just a one off thing that lasts for one week, then that is OK, but if it lasts any longer, and there are still excuses as to why you can’t have your money, then your money is gone.
7. • They have to transfer the database and there are numerous glitches that prevent the script from working. In reality, if there has to be a database transfer, then if it takes any longer than 2 days, there is something seriously wrong and your money is more than likely gone with the wind.
8. • Some programs state that if you wish to withdraw your money, then you have to purchase their brand new ‘anonymous’ debit
1. card costing several hundreds of dollars. Guess what? Once you have purchased your card, there will be numerous problems, from legal reasons to printing problems that will prevent you from getting your card. As you should realize, it’s just another scam to get more money out of you by holding your money hostage.
Social Engineering
Social engineering is what hackers/crackers and scammers do when they try to build up a trusting bond between them and someone else.
A good con artist is a very good social engineer. They can come across as very pleasant, a very nice person to do business with. They always have time for you, or always seem to be there to help you out. Basically doing everything to gain the trust of yourself.
The scammer will then start asking for more and more personal details over the course of time, but present it in an entirely normal and non-alarming way. Eventually they might ask for some very personal details that they could use for creating a new identity for themselves, or they may ask for you to invest some money with their program, or part with some money in some other fashion.
Generally if you don't give into their demands for money or information, they will either get aggressive or make you feel really guilty about not trusting them. The very best scammers can make you part with your money without you even realizing it.
It's very difficult to know when you're being social engineered, and if the person is very very good at it, you won't have any idea at all!
The only thing you can do is be extra wary when someone you've been chatting to starts asking for money (such as a small loan or something).
Stay safe and keep vigilant!
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