HYIP stands for High Yield Investment Program. HYIPs are investment programs normally offered via the Internet. HYIPs are popular because they typically accept investments of $100 or less while offering high returns. The introduction of e-currencies such as e-gold and StormPay has made it easy for HYIPs to operate across international boundaries, and to accept large numbers of small investments.
Many HYIPs have turned out to be scams. Scam HYIPs use the ponzi scheme approach, in which new investors provide the cash to pay existing investors, to the extent that existing investors chose not to leave their money in a HYIP. This approach allows the scam to continue as long as new investors are found and/or old investors leave their money in the scheme.
The turnover in HYIPs is high. For example, one website that links potential investors to active HYIPs has a "blacklist" of more than 500 HYIPs that have gone out of business.
HYIPs are frequently advertised in spam emails, since people are typically given a commission (for example, 9% of invested funds) when they provide a referral of a new customer.
HYIPs typically are not based in the United States, Europe, or Japan - countries that have strong laws against unregistered investment programs. HYIPs disclose little or no detail about the principals, management, location, or other aspects of whom is getting the money to be invested, and relatively little information (other than asserting that they do various types of trading on various stock and other exchanges) on how their investment programs actually work.