Massive losses in scams only a click away

By Martin Hesse Time of article published Nov 22, 2014

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A number of people in the Strand/Somerset West area of the Western Cape have apparently become victims of an online investment scam, ProfitClicking, now going under the name of AdClick Xpress.

A couple known to me were persuaded by a local “agent” to invest in the scheme, in which revenue is supposedly generated by people clicking on website advertisements. They could see their profits “clicking” up by the day, but when they tried to withdraw any money, they hit a dead end.

Some research on the internet revealed that investors worldwide have lost money in this scheme. It also revealed that the scheme’s name change was its third: it started off back in 2010 as JustBeenPaid.

It has all the hallmarks of one of thousands of investment schemes on the internet collectively known as HYIPs (high-yield investment programmes). Most are scams. Once the operators have raked in a hefty amount for themselves, and incoming investments dry up, the operation simply disappears off the web, or morphs into another, similar scam. Most investors are left with no money and no recourse. Because it’s impossible to find out who is behind these entities, there’s no one to pin down to sue.

The schemes advertise returns that are outrageous, and this fact alone should have you reaching for your barge pole. A recent scheme to emerge on the web, Grand FX, which purportedly invests on the forex markets on your behalf, promises “standard” investors a return of 1 400 percent on money invested after 25 days, and “VIP” investors 2 000 percent after 20 days.

As the former editor of Personal Finance, Bruce Cameron, used to say about too-good-to-be-true returns, if the operators were indeed making such good profits, they would certainly not be letting the whole world into their secret.

If the obscenely high returns aren’t enough to set the red lights flashing, here are some other warning signs:

* The website business has no physical address and no telephone number. The only contact is via email. If the site does list a physical address, it may be false, as in the case of Flipping for Profit (see “Beware of property-flipping scheme”, which you can find on our website,

* The language used on the website is ungrammatical, or it may be flowery, vague or unidiomatic. Take, for instance, this passage from, which offers a return of 5 000 percent on a two-day investment: “Our firm strives to provide you with exceptionally well customer service. For us, each and every client is equally important and special. The website capability and trade execution on our website is commendable. Our company offers you such excellent services at a very feasible cost.”

* How the business operates and how it makes money are couched in vague terms, with no concrete facts or figures, and no means through which you can verify the information.

* You pay through a relatively unknown online payment system or e-currency. Many of these systems and currencies are unregulated in any of the big Western economies – or any other jurisdiction – and some are known to have been set up by the con artists themselves, according to Wikipedia. Some have been linked to other criminal activities and money laundering.

* The website offers incentives to people acting as agents, who recruit new investors.

The schemes are becoming increasingly sophisticated, exploiting the electronic media to the full. In an alert, the United States Financial Industry Regulatory Authority (Finra) says that HYIPs use social media – including YouTube, Twitter and Facebook – to “fabricate a ‘buzz’ and create the illusion of social consensus”, thereby lending an air of legitimacy to their operations.

They also use other, supposedly objective, websites to punt their schemes. Says Finra: “Some of these sites purport to monitor and rank the ‘best’ programmes. Others tout winning investment strategies or provide a forum for trading tips on how to profit from HYIPs, even those suspected to be scams. Still others expressly caution investors against HYIP scams, using reverse psychology to create the false impression that a particular operator is somehow different.” These tactics “create the illusion of a real market, complete with real investors, real investments and real demand”, Finra says.

Nowhere is the maxim that you shouldn’t believe all you read more applicable than on the internet. The web is the least credible of the media; anyone can put anything on a website and dress it up to look legitimate. For example, HYIP sites often give “statistics” of how much has been invested, how much has been paid out, and how many investors they have attracted. Don’t believe any of it.

Finra gives the following tips on how to avoid being scammed:

* Ask and check. Always independently verify who you are dealing with and whether the seller of an investment is licensed to do business with you.

* Exercise scepticism. Ask yourself why they would want to “share” their “secrets” with you.

* Recognise persuasion at work. Rankings and testimonials are tactics fraudsters use to bolster the credibility of the scam, but remember: credibility can be faked. And avoid falling into the trap of thinking that you can outsmart the con artists. In these schemes, sooner or later, the investor always loses.

If you have already put money into an HYIP, Finra says:

* Do not put in more, even if the programme appears to be paying “interest”;

* Do not refer others to HYIPs in an effort to garner referral fees – doing so only furthers the fraud and draws you into the scheme; and

* Do not try to “ride the Ponzi” by trying to get in and get out before the scheme collapses. If you do, you could end up like investors in Genius Funds, an HYIP shut down by US regulators in 2010 in which participants lost $400 million.


If you have lost money in an online investment scam, you probably have little recourse against what is probably a fly-by-night website operator who could be based in central Africa or the Far East. But if you were referred to one of these schemes by a local agent who received commission from your referral, and you have proof of the referral and your investment payments, you have recourse against the agent. You can:

* Take him or her to the small claims court, if you have lost (or want to claim back) R15 000 or less;

* Sue him or her in the courts, if you can afford the legal fees; or

* Lodge a complaint with the Ombud for Financial Services Providers, Noluntu Bam, who has jurisdiction over financial advisers and commission-earning agents, and who can order an adviser or agent to compensate you up to an amount of R800 000.

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