Scam Projects: How to Tell You're Being Led Toward Losing Your Money, and What to Do

A scam project is a scheme built from day one to take money from its participants: collect fees and disappear, or shut down "for technical reasons." The difference between a scam, a HYIP and a pyramid is intent, not appearance: from the outside, a scam can look like an ordinary company.

Below are six steps: how to tell a scam from a HYIP and a pyramid, how to check the people and the terms, and what to do before and after you put money in. This matters to anyone who has been offered a "business," and to leaders in particular: you answer personally to the people you brought in.

Step 1. Tell a scam from a HYIP and a pyramid

These three words describe different things. A scam is an intent: take the money and vanish. A HYIP is a promise of a high return on a deposit, which we cover in detail in our article on HYIP projects. A pyramid is a structure: payouts to earlier participants come from the fees of new ones. What this looks like in practice is described in our article on checking for a pyramid in one evening.

In real life these concepts blur together. A HYIP is almost always built like a pyramid, and a pyramid sooner or later runs out of new deposits, at which point the organizers shut the project down. So don't argue about the label. Ask one question: where does the money for payouts come from?

The general principle, which the US Federal Trade Commission also relies on in its guidance on multi-level marketing, is to look at what the company pays for: real sales to customers, or recruiting new participants. Purchases that participants make to hit a qualification target rather than for their own use are a sign of a pyramid. A real product doesn't save a project: you can sell it and still live off recruitment.

Step 2. Find out who is behind the project and where it is registered

A scam depends on anonymity. If the site has only nice photos of a "team" and pseudonyms, and there is no legal entity, that is already your answer. A real company has a legal entity name, a country of registration and bank details, and its contract names parties you can look up in the public registers of your country.

A practical trick: cross-check three sources. Who is named on the website? Who is named in the contract or rules? Who actually receives the money? If the site shows one company, the rules name another, and you are asked to pay to a wallet or the card of a private individual, you need not read any further. Also look at the public registration data for the domain: if the site is a few weeks old but promises "years of success," don't believe it.

Check whether the project appears on the Bank of Russia's list of companies with signs of illegal activity; in Kazakhstan, warnings are published by the Agency for Regulation and Development of the Financial Market and by law enforcement. Not being on a list guarantees nothing: a new scam simply hasn't made it there yet. For leaders we have our own filter: on LeaderPitch a project first passes a moderator's check and only then can write to leaders, but that doesn't replace your own checking.

Step 3. Look for red flags in the terms themselves

A scam gives itself away in its terms. A guaranteed return, payouts tied to fixed dates, withdrawals only after you upgrade your plan, a "tax" for withdrawing, rewards that grow faster for each person invited than for sales: all of these are signals. We put together the full list in our article on the signs of a financial pyramid.

Do the math on the promise. A hypothetical example: you are promised 1% a day on a $1,000 deposit. That is $10 a day, $300 a month and $3,650 a year, or 365% annually. No product and no trading strategy guarantees a result like that, and whoever promises it doesn't explain where the money comes from.

Step 4. Don't pay in or invite others until you've checked

The most expensive mistake is "joining with a small amount just to see." A scam usually makes the first payouts willingly: it is cheap advertising for them and proof for you. The large deposit comes after a small win. Until you know who receives the money and where the payouts come from, the amount you should test with is zero.

Leaders need to be especially careful. The people you bring in trust you, not the project. If the project closes, they will come to you, not to an anonymous owner. On top of that, public calls to invest in a pyramid can bring legal liability. In Russia, organizing a pyramid falls under Article 172.2 of the Russian Criminal Code, and attracting money into pyramids and advertising them carries administrative liability under Article 14.62 of the Russian Code of Administrative Offenses. In Kazakhstan, it is Article 217 of the Criminal Code of Kazakhstan (creating and running a pyramid) and Article 217-1 (advertising). As of November 2026; check with a lawyer before deciding.

If your doubt is about a network marketing company rather than an obvious HYIP, follow the process in our article on checking a network marketing company before you join.

Step 5. If you've already invested: what to do

The first hours matter most: while the project is still running, the evidence is in place and the bank still has a chance to stop the payment. There are no guarantees of getting money back, but chaotic action only lowers your chances.

1. Stop the payments. Don't pay "to unlock" or "to confirm a withdrawal": that is a second wave of extraction.
2. Collect evidence. Conversations, receipts, recipient details, wallet addresses, dated screenshots of the rules and your account. Keep copies outside the project.
3. Contact your bank or payment service. Report the transaction as soon as possible and ask them to accept a dispute claim for the payment you made.
4. File a report with law enforcement. Attach the materials you collected. The more precise the timeline and payment details, the better the chance the report is taken into work.
5. Warn the people you brought in. Tell them plainly that you doubt the project and advise them to stop payments. It is an unpleasant conversation, but silence is worse.
6. Don't pay "refund helpers." So-called specialists who promise to recover your money for an upfront fee often turn out to be a second wave of fraud.

Step 6. Report the project to warn others

A report to law enforcement is for you and for the investigation. But it doesn't protect people who haven't invested yet: they need the warning to be where they check a project. Report it to your country's regulator, and don't stay silent in chats with people you know, sticking to the facts: no insults, only what you can back up with documents.

We run a blacklist on our platform: you can search it by name, nickname, phone number and project name. Anyone who has signed in through the @LeaderPitchBot bot can report a fraudster, and a moderator checks every entry, so a random complaint doesn't turn into a stigma. As in every other case, stick to the facts: what was promised, where you sent the money, what happened when you tried to withdraw.

For more on the typical schemes found specifically in network marketing, see our article on scams in network marketing.