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 Pennsylvania, as in other states, 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 frequently associated with fraudulent activities. The Pennsylvania Securities Act of 1972 requires that all securities offered or sold in the state be registered unless they qualify for an exemption. Additionally, individuals or firms offering investment advice or selling securities are generally required to be registered with the Pennsylvania Securities Commission. The hallmark promises of HYIPs, such as unusually high returns with little or no risk, are classic signs of investment fraud. The Pennsylvania Department of Banking and Securities warns investors to be wary of such schemes and to conduct thorough due diligence before investing. At the federal level, the Securities and Exchange Commission (SEC) also actively pursues actions against HYIPs when they constitute fraudulent schemes. The SEC and the Financial Industry Regulatory Authority (FINRA) issue investor alerts and provide resources to help individuals recognize and avoid these types of scams. Pennsylvanians are encouraged to verify the registration of investments and the licensing of individuals and firms before investing, and to report any suspicious investment activities to the appropriate authorities.