Federal investment regulators issued a warning this week about a sophisticated and fast-growing fraud that trolls social networks for victims and has already cost investors hundreds of millions.
Using advertisements on Facebook to lure in initial victims, who are then convinced to inadvertently con their friends, so-called “high-yield investment program” scams have gone viral, spurring an entire online community, according to the Financial Industry Regulatory Authority.
“HYIPs use an array of websites and social media –including YouTube,Twitter and Facebook — to lure investors,” said John Gannon, senior vice president of investor education with FINRA. “They’re very sophisticated.”
The pitch is a simple one: Invest in safe securities that pay high yields through a supposedly “guaranteed” program that pays “interest” as often as once a week. But these programs are Ponzi schemes that do nothing more than pay old investors with the money brought in from new investors.....
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