Invest money and get 120% back - a site says

Question

Recently I've been coming across many on-line resources that propose people to pay them in order to to get seemingly gigantic profits.

This is what the 'About us' page of such sites normally says:

Extremely-Successfull-Corporation is a new dynamically developing investment project which helps you earn (loads of!) money quickly and easily!

Our team manages the funds that you provide us with and invests them in stocks, real estate and lots of other stuff. We are 185.67% professional traders and guarantee that each your investment will result in 125% profit for you! The only thing you have to do is deposit money and wait for the revenue for 24 hours.

Join us today and start earning money right away!

They also provide a lot of links to various social networks where people praise that investment company and even post photos of (quite a lot of) money they say they've earned only thanks to it.

How this works

Basically, they say that you kinda lend them money, they use it in investment and then return that amount multiplied by 1.2.

I got curious about this thing and decided to try it out, although I was (and I am) pretty sure that this is scam. So, I've chosen a random site out of tens of similar sites that provided such 'service'. This is what I had to do to invest into... what?

1. Creating an account is easy: you supply an e-mail and create a username and a password. It looks like the e-mail is never used after that.
2. I had to create a Qiwi wallet and deposit some money to it as it was the only way to deposit money to the account.
3. After that the site told me to provide it with the number of my wallet and transfer the amount of money I'd like to put onto my account to another Qiwi wallet and supply my username as a comment to the payment.
4. After that I had to put the transaction code into a field on the site to verify the payment.
5. The payment was completed successfully, and I pressed the Deposit button to deposit 100Something. The site immediately accepted it and started the 24 hour countdown constantly showing that after that 120Something will be on my balance.
6. Right now I must wait for 24 hours to see my money lost the revenue.

My concerns

The problem is, I don't understand, how such sites work. Is that scam or not? Some of my friends told me that they've actually received the revenue after they deposited a bit of money to similar sites, and I don't have any evidence not to trust them.

If such sites really 'work', then how and why?

Why would anyone trust them so much to give them money for absolutely no reason? Okay, I'm not so clever, but they can't make profit only because of stupid people, can they?

Why there seem to be so many people in different social networks who claim the site has helped them to earn money? If this was scam, the creators of the site would have to pay them so these people wrote their advertisements posts, to my mind: nobody would like to advertise someone's business for free, right? Then, how do the site's owners make profit?

Anyway, who will give you 120$ after you gave them only 100$?

The question

Could someone please explain: are such sites scam or they could be not scam?

Update

Surprisingly enough, I was able to receive 1.2 times my deposit and transfer it to my Qiwi wallet.

What I learned from the answers, Wikipedia and Google is that such schemes allow the 'clients' (actually, victims) to win probably several times and then suddenly disappear with all the investments. So now I'm planning to run away from that site as fast as I can, but another question has arisen: is there any way to determine that today or tomorrow the scammers will disappear with the money? Can there be any signs (except inability to withdraw the money, of course)?

Answer 1

This is clearly a scam, and you should stay away from it. Anyone reading this knew that from the title alone - and it seems that you know it too. Don't "test" whether something is a scam by putting your own money in it. That is exactly how these scammers make money, and how you lose it.

How their scam works is irrelevant. The simple fact is that there is no way you can safely earn 20% return over the course of a year, let alone in 1 day*. You know this is true. Don't bother trying to figure out what makes it true in this case. There is no free lunch. Best case scenario, this is a hyper-risky investment strategy [on the level of putting your money down at a roulette wheel]. Worst case scenario, they simply steal your money. Either way, you won't come out ahead. Although I agree with others that this is likely a Ponzi scheme, that doesn't really matter. What matters is, there is no way they can guarantee those returns.

Just go to a casino and throw your money away yourself, if you want that level of risk.

*For reference, if you invested $100 for a year, earning 20% returns every day, you would have 6 million trillion trillion dollars by the end of the year. that's $6,637,026,647,624,450,000,000,000,000,000. that number doesn't even make sense. It's more money than exists on earth. So why would they need your $100?

Answer 2

Sounds like a Ponzi scheme, amplified by social media. Ponzi schemes always rely on some "winners" to say they are winners, so they can grow the pot. If you put in $100 and got out $120, that's the $20 the operator pays so that the next guy who puts in $100 gets back... zero.

Answer 3

As others have commented, this is almost certainly a Ponzi scheme.

What will happen is that they will report to you that you are earning fantastic returns. This will encourage you to pour more money into the scheme in the belief that you are making huge profits.

The problems will start to occur when you ask for your money. You won't receive any money and by the time you realise you have been scammed, the site operators will have vanish with all of the "suckers" money.

Answer 4

The problem is, I don't understand, how such sites work. Is that scam or not? Some of my friends told me that they've actually received the revenue after they deposited a bit of money to similar sites, and I don't have any evidence not to trust them.

Yes there are scam. Stay away. Quite likely people got real money back into Bank Account. Or more likely it shows that there is more [notional] money in the sites account.

If such sites really 'work', then how and why?

These sites work, because there are quite a few people who believe in free / easy money. The site could be classic pyramid / Ponzi scheme. They could also be involved in some kind of Money Laundering.

Why would anyone trust them so much to give them money for absolutely no reason? Okay, I'm not so clever, but they can't make profit only because of stupid people, can they?

The same way you did, at times just for fun to experiment. At times because they believe there is easy get rich way. There is a reward that works so that if you see 120 you start believing in it. If you try and withdraw, there will be quite a few obstacles; under the pretext of holding period, withdrawal fees etc... but mostly they will encourage you to keep depositing small amounts and see it grow.

This of it this way; if one can make 20% day on day ... one does not need someone else's money. The power of compounding would mean very quickly $ 100 would become 88 BILLION in 120 days!