Time to Talk Scams Again!

August 2nd, 2008 · No Comments

Ok, apparently people are falling for these types of scams so I thought I would reinforce what you can already find on the internet pretty easily about why NOT to invest in these schemes.

Today’s case in point is: Sure-Profits.Com

If you browse over to the site you will see that they are promising returns of 45% for 3-day investment, 75% for 2-week investment and 350% for 1-month investments. The 2-week and 1-month investments return the principal as well as the “profit”. According to their site they have thousands of investors with over $2 million deposited.

Now, first off, there is the old adage of, “If it looks too good to be true, it probably is.” ALWAYS bear this in mind when looking at any internet investment scheme. Sure-Profits is a prime example of a ponzi scheme, and is part of the wave of High-Yield Investment Programs (called HYIPs) that are springing up across the internet.

The purpose of a HYIP, just like Ponzi schemes, is to use the income stream from new investors to pay off the original ones for the purposes of perpetuating the scheme. If they can convince enough people to invest and leave their money in with the promises of even higher rates of returns a Ponzi scheme can net its operator millions of dollars before it collapses. Eventually you can’t find enough new investors to pay off any more investors so the operator cuts and runs.

The ponzi scheme is an age-old scam but is gaining new life today through the internet because the operators are able to recruit from a much larger pool of people and are able to do things like provide a “statistic” on their website such as how much money they have paid out or how many investors they have. Are they probably just making these statistics up and maybe changing them every day or so? Probably. I could post a statistic on my website saying that I had 10,000 investors who had all made $250,000 each off of a paltry $100 investment, won’t you come join me too? Just because someone posts something on a website doesn’t make it a fact - this is the important thing to remember about Wikipedia at times too!

Another nice way the scammers can net money is from creating false e-currency websites. I’d recommend not really trusting any e-currency sites except the big name ones that have been around and work in conjunction with major companies such as Google Checkout or PayPal. Those companies are fairly well-regulated and although they do have problems (PayPal has lots of complaints against it) they at least are not scams trying to bilk you out of money like a lot of other fake e-currency sites are.

Basically, when it boils down to it just think to yourself, “how are they making these profits?”. If the site explains it as real estate investment and investments in various world banks etc it is likely all made up. If these investments were so profitable, why isn’t Warren Buffet doing them? Why hasn’t Bill Gates or Donald Trump already bought into these schemes and made billions? Interest being offered more than 4-5% a month is probably bogus and even that much would be a pretty high-yield investment involving a lot of risk. Good money market funds only pay a 5% ANNUAL yield right now, which works out to .42%/month yield.

Another good way I have found of taking a step back and evaluating these types of schemes is to look at what they are asking in terms of an equivalent situation in real-life. For instance, with sure-profits.com this example comes to mind: I’m walking the streets of New York on my way to a nearby restaurant when a stranger on the street stops me. The stranger is fairly well dressed, wearing a suit and tie and it looks like he has a rolex on his arm. He tells me about this new investment scheme that is currently in ‘beta’ and needs a few more investors to get off the ground. He promises me that for $100 and my mailing address he will mail me $500 back in 2 weeks if only i’ll trust him with my money.

Would you give the man on the street your money? Better yet, if he asked for your credit card number and verification code, would you give a total stranger that? That is basically what you are doing with a lot of these sites and e-currency sites!

With HYIP programs there are also exists a nice side scam of HYIP monitoring sites that put investments in the various programs and then monitor whether they receive payouts from those programs. The issue is that the HYIP monitors link to the sites using referral links so they make even more money and, often the HYIP monitor site is the only investor that the HYIP pays to make it look like the HYIP is legit! Also, the HYIP doesn’t tell you that the initial investment that they make into the HYIP is from a fee they charged the HYIP for listing on the monitoring site! The monitoring sites are enablers of the scam and the monitoring sites are probably the only ones (other than the HYIP operators themselves of course) that are making a lot of scammed money.

One last program to cover in today’s scam talk are matrix lists. These are sites that try to pretend to be legit by selling you an e-book for say $29. Then they put you a matrix list as a bonus. These lists can be for things like computers, PS3s, 360s, Wiis or any other medium to large ticket electronic item such as a plasma TV. They will basically say the guy at the top of the list is in the “earning spot” and then they need 15 people to buy the e-book before the guy at the top gets his Nintendo Wii shipped to him completely free of charge! Then, the earning spot moves to the next guy on the list. See the problem? Only the first few people on the list will ever actually earn the item, the rest of the people are all part of the ponzi scheme. Matrix lists are just a disguised ponzi scheme with new investors paying off the old ones. The old ones can then trumpet the “success” of the scheme and help perpetuate it by posting to blogs and forums about their free Wii!