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 Texas, High-Yield Investment Programs (HYIPs) are subject to both state and federal securities laws. The Texas State Securities Board (TSSB) is responsible for enforcing securities regulations within the state. HYIPs are often unregistered investments run by unlicensed individuals, and many are fraudulent schemes promising high returns with little to no risk. The TSSB has issued warnings about such programs, emphasizing that they may be illegal and advising investors to be cautious. Under Texas law, offering or selling unregistered securities or operating without a securities dealer or investment adviser license is a violation of the Texas Securities Act. Additionally, fraudulent activities related to investment schemes, including HYIPs, can lead to severe penalties, including fines and imprisonment. Investors are encouraged to verify the registration of any investment and the licensing status of the person offering the investment with the TSSB before committing funds. At the federal level, the Securities and Exchange Commission (SEC) also takes action against HYIPs that are found to be fraudulent, as they often constitute a form of investment fraud or a Ponzi scheme.