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 Michigan, 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 Michigan Uniform Securities Act (2002) requires the registration of securities offerings and licensing of individuals selling investments unless an exemption applies. Promises of unusually high returns with little or no risk should be a red flag for potential investors. The Michigan Department of Licensing and Regulatory Affairs (LARA) oversees the enforcement of securities laws and can take action against fraudulent investment schemes. Additionally, the U.S. Securities and Exchange Commission (SEC) also regulates investment programs and actively warns against HYIPs, which may be considered Ponzi schemes or other types of investment fraud. The SEC can bring civil enforcement actions, while criminal fraud is typically prosecuted by the Department of Justice. Michiganders are advised to verify the registration of any investment and the licensing of the person offering the investment with LARA and to be skeptical of investment opportunities promising extraordinary returns with little to no risk.