Get-rich-quick, Ponzi and pyramid schemes

Find out how get-rich-quick schemes like Ponzi and pyramid schemes work, how to avoid scams and what to do if you’re scammed.

First published: 09/08/2017 Last updated: 20/03/2023 See all updates

Get-rich-quick schemes promise investors high returns not usually available through traditional investments.

While early investors may make money from the scheme, people who invest later usually lose their money.

How get-rich-quick schemes work

The 2 most common get-rich-quick schemes are Ponzi and pyramid schemes.

Ponzi schemes are named after Charles Ponzi, who guaranteed a 50% return to investors in the US in the 1920s. Most of the money he received was used to pay dividends to early investors, and the scheme collapsed when he couldn’t attract more money to pay later investors.

Pyramid schemes work in a similar way, although investors are encouraged to recruit more people and are paid commission when they do. These scams are also called franchise fraud, multi-level marketing or a chain referral scheme.

These schemes seem genuine and profitable to the early investors, which encourages them to attract more people and money.
But these types of schemes collapse when the supply of new investors and money ends. Investors usually find most or all of their money is gone, and that those who set up the scheme took most of it for themselves.

These schemes often target community, religious, ethnic, older or professional groups. Leaders within a group might be targeted first, receive a high return on their investment, and promote the scheme to others before it collapses.

Scammers also target people searching for investments online through search engines like Google and Bing. They may offer high returns to tempt you into investing, but some may also offer more realistic offers to appear more legitimate. 

If you are offered an investment opportunity through a search engine, they may not be regulated or authorised by us. You can check the FCA Warning List for firms to avoid. 

How to protect yourself

You should only deal with financial services firms that are authorised by us. Check our Financial Services Register to find out if a firm is authorised. If you can’t find a firm on the FS Register, call us on 0800 111 6768.  


Always be wary if you’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.

If you're contacted unexpectedly by a financial business or individual, make sure you reply using the contact details on the FS Register

Find out more on how to protect yourself from scams.

You should seriously consider getting financial advice or guidance before investing. MoneyHelper has information on how to find a financial adviser and our InvestSmart pages will help you make better investment decisions. 

If you've been scammed

If you’re worried about a potential scam or you think you may have been contacted by a fraudster, report it to us. Call us on 0800 111 6768 or use our contact form.  

If you’ve already invested in a scam, fraudsters may try and target you again or sell your details to other criminals.

The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.

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