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Ponzi Schemes Move Online

Researchers from Wellesley College and the UK’s University of Cambridge have found some people are sinking money into online investment scams despite knowing they are fraudulent. The research is reportedly among the first to study high-yield investment programs, an online form of a Ponzi scheme, in which there are no real investments or profits and in which early contributors receive returns only from money paid by new participants. Thus, some participants who realize they are working with a HYIP are trying to recruit new participants so that they can make money before the scheme collapses. The investors often use websites that monitor and aggregate information about the HYIPs. The researchers said those who utilize the sites could be easily misled and stated regulators need to shut them down and provide consumer education. The researchers tracked 1,600 programs over nine months and found that they handled about $6 million per month. Each promised different rates of return on investment, ranging from 1 percent daily to 440 percent in 10 minutes.
(BBC)(“The Postmodern Ponzi Scheme: Empirical Analysis of High-Yield Investment Programs,” Moore, et al.)

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