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 Rhode Island, 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. Rhode Island's securities laws require that investment programs must be registered with the state, and those offering investment advice or selling investments must be licensed. The Rhode Island Department of Business Regulation, Securities Division, is responsible for enforcing these laws. At the federal level, the Securities and Exchange Commission (SEC) also regulates investment programs and takes action against fraudulent schemes, including HYIPs. The SEC has issued warnings about HYIPs, noting their promises of high returns with little or no risk are classic signs of fraud. Rhode Islanders are advised to verify the registration and licensing status of any investment program and to be skeptical of any investment opportunity that promises unrealistic returns. If an investment program, like an HYIP, is using social media for promotion or is encouraging investors to spread the word online, this should raise red flags and warrant additional caution and due diligence.