What’s all the HYIP about?

JLP just sent me an e-mail about a forum that chats about autosurf programs and HYIP programs.

HYIP stands for High Yield Investment Plan. Before you get too excited, let me explain what they are.

Often HYIPs have as their core website advertising sales called autosurf programs. These are scripts that automatically cycle through websites that are either paying to be there (so much per 1,000 impressions) or are surfing to be there (you surf two sites to get viewed once by someone else). This is all fine so far, though the quality of the traffic arguably is pretty poor and untargeted for most non-marketing websites.

The HYIP part comes from “investments” into the program, which get paid back if you meet certain minimum autosurfing quotas. One might offer “365% per year return,” meaning that you get paid back 1% of your investment per day if you surf, say, 50 websites per day. And, supposedly, the more you “invest” the more you can make.

If this is to be a viable business model, then there have to be pretty severe limits on the total “investment” that members can make in the program, and the earnings have to be capped.

Problem is, the “investments” are not capped. What's more, members who recruit other members are paid a portion of their recruits' “investments.” This adds to the long-term insolvency of the business model.

How about this on top of it all: Promise a return of 44% in 12 days?! Earn 12% per day for 12 days for viewing 12 sites a day. That's was 12DailyPro.com promised.

Well, recently the SEC shut down 12DailyPro.com for two main reasons: 1) Selling “units” in an investment that isn't regulated and registered is illegal; 2) it's basically a Ponzi scheme. This was a huge program. It had (and still has!) a three-digit Alexa ranking. Some members invested tens of thousands of dollars in the program — and lost it all.

So how do you avoid being taken by such “investment opportunities?”

• I'll give you one guess for the first one: If it sounds too good to be true …
• Think about what you're doing for your money. Are you working? Does what you're doing require any skill at all? Turning on a computer and logging into a website doesn't pass this test.
• Think about what you are selling. Are you selling anything? Do you get a reward for recruiting new members? If the primary business is shuffling money around, then it's almost certainly a pyramid scheme. But even if you can purchase advertising through the program, it still might be a scheme.
• Realize who makes the real money. It's the owner of the site and the people who get in really early and recruit like gangbusters.

Let me end this post by coming clean a little bit. After starting up MightyBargainHunter in November, 2003, I started using some manual traffic exchange programs to promote the website. I've also spent some money buying “pro memberships” in a couple of programs. I've made some money and lost some money in these, and it's been quite a learning experience and a lot of time spent in them. I've largely stopped participating in the programs, and probably will cancel my remaining programs. Most of what I have to show for my efforts are a few visits to my website that are triggered by the people I recruited using the traffic exchanges.

Some of the things I've learned:

• You're not really the one in control. You can follow the rules of the program, and build up a huge downline, and do something to tick off the owner, and he cancels your account. Poof! Gone!
• You don't really own anything of value by playing by their rules. A mailing list is valuable, but you really don't own that mailing list. You can maybe contact them with a form on the program's website, but tick off the owner, and you can't use the form anymore.
• You're making as much, or more, money for the site owner than you're making for yourself. The owner takes his cut, and your upline gets their cut.
• It is possible to make money with manual and autosurf exchanges, but the programs are mainly a means to an end, not the end itself. Internet recruiting is a numbers game — you might get a sign-up only one in 10,000 visits. The more eyeballs you have on your particular referral page, the higher the chance that someone will sign up. This requires a lot of your own surfing (to earn views of your site) and also a lot of recruiting so that you get “free” views of your sites from their surfing. Then, once you have a lot of traffic that you can throw at a particular site that offers something of value, THAT'S where the money is to be made. But it's not in the autosurf programs themselves, really.
• It's usually far better to build up your own website that you control. That way, for the most part, you make the rules, and you keep most of the fruits of your labor. You control your own destiny. This website has done far better than any single program I've joined, and, hopefully, this website still has a lot of upside!

So everyone, go out and recruit a whole bunch of readers for me 😉 Seriously: Thanks for reading!