Ponzi Schemes
Investment frauds that pay 'returns' to early investors using new investors' money until they collapse.
Last reviewed: 1 June 2026
What this scam is
A Ponzi scheme pays returns to existing investors from money paid in by new investors, not from real profit. It depends on constant recruitment and collapses when new money slows.
How it works
An operator promises steady, attractive returns and pays them out — using other people's deposits. Early investors may genuinely receive payments, which fuels word-of-mouth. When withdrawals exceed new deposits, the scheme fails and most participants lose everything.
Common red flags
- Consistent returns regardless of market conditions
- Pressure to recruit others
- Difficulty withdrawing or 'reinvest' encouragement
- Vague or secret 'strategy'
Sanitized example messages
Illustrative, sanitized examples. Personal details are replaced with placeholders such as [phone number] and [fake link].
Our fund pays 3% every month, guaranteed. Bring a friend and we'll boost your rate.
Payment methods used
- Bank transfer
- Cryptocurrency
- Cash
Who is usually targeted
- Members of close-knit communities
- Friends and family of recruiters
What to do immediately
- Stop investing and request a full withdrawal in writing
- Document the scheme and its operators
- Report to your financial regulator and fraud service
- Warn others who may be involved
Evidence to preserve
- Statements and 'returns' records
- Marketing materials
- Operator details
Where to report it
- Action Fraud (UK) — UK national fraud & cybercrime reporting centre
- FTC ReportFraud (US) — US Federal Trade Commission fraud reports
- FBI IC3 (US) — US Internet Crime Complaint Center
- Scamwatch (Australia) — Australian competition & consumer reporting
Always verify reporting routes and emergency contacts on the official government or agency website for your country.
Frequently asked questions
How is a Ponzi different from a pyramid scheme?
A Ponzi centres on a fake investment paying 'returns' from new deposits. A pyramid scheme focuses on recruitment, where members earn mainly by signing up others. Both are unsustainable and collapse.