Accessibility Menu

Ponzi Scheme: Overview, Origins, Example

By Kristi WaterworthUpdated Nov 1, 2025 at 10:08 PM | Fact-checked by Robin Hartill, CFP

Key Points

  • Ponzi schemes pay out early investors with money from later investors.
  • They differ from pyramid schemes in that Ponzi schemes are presented as investments with large returns, rather than business opportunities.
  • Warning signs of Ponzi schemes include promises of outsized returns and complex, opaque investment processes.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.