High-Yield Investment Programs (HYIP) are unregistered investments typically run by unlicensed individuals—and they are often frauds. The hallmark of an HYIP scam is the promise of incredible returns at little or no risk to the investor.

An HYIP website might promise annual (or even monthly, weekly, or daily!) returns of 30 or 40 percent—or more. Some of these scams may use the term “prime bank” program. Fraudsters may use social media to promote an HYIP website or may encourage investors to use social media to share information about a HYIP website with others. If you are approached online to invest in one of these, you should exercise extreme caution—they are likely frauds.

In California, High-Yield Investment Programs (HYIPs) are subject to both state and federal securities laws. These programs are often unregistered investments run by unlicensed individuals and are commonly associated with fraudulent activities. The California Department of Financial Protection and Innovation (DFPI) warns investors to be wary of any investment that offers unusually high returns with little or no risk. Under the California Corporations Code, any offer or sale of securities must be either registered with the DFPI or exempt from registration, and individuals or firms offering these investments must be licensed or exempt from licensing. The promise of exorbitant returns, such as 30% or more, is a red flag for potential fraud. Additionally, the use of terms like 'prime bank' and the promotion of these investments through social media are tactics often used to lure investors into scams. Californians are advised to verify the registration and licensing status of any investment and the individuals offering them before investing, and to be cautious of any investment opportunity that sounds too good to be true.