What is a Ponzi scheme?

A Ponzi scheme pays apparent investment returns using investors’ own money or money from newer investors. Report Fraud says there is no genuine investment generating those payments. 1

Early payments can persuade people to recommend the scheme. When new money stops, the arrangement can collapse and leave investors without their savings. 1

By Secordit. Last checked: 7 November 2026.

Go to the steps · All glossary terms

How does it work?

  1. A promoter advertises an investment with unusually attractive returns. 1
  2. Early investors receive payments funded by investors rather than investment profits. 1
  3. New money supports the illusion until the arrangement collapses. 1

What Report Fraud describes

Report Fraud describes early investors telling friends and family after receiving payments. The payments lend credibility even though no genuine investment produces them. 1

What are the warning signs?

  • A promoter downplays the risk of losing money. 1
  • You are pressed to decide before taking advice. 1
  • An attractive payment history is used instead of a clear investment explanation. 1

What to do now

  1. Stop adding money to a scheme you suspect is fraudulent. 1
  2. Tell your bank if you have paid into a suspected scam. 12

UK reporting and support

  • If you paid a suspected scam, contact your bank using the number on your card. 23
  • Report fraud in England, Wales or Northern Ireland to Report Fraud. In Scotland, call Police Scotland on 101. 34
  • If someone is in danger, call 999. 4
  • Forward suspicious emails to [email protected]. Forward suspicious texts to 7726. 5

How can you protect yourself?

  • Seek independent advice before a significant investment. 1
  • Check the firm’s regulatory position rather than relying on a friend’s recommendation. 1

Frequently asked questions

Can a Ponzi scheme make early payments?

Yes. Report Fraud says early payments come from investors’ money, not genuine investment profits. 1

Is a friend’s recommendation enough?

No. Early investors can spread the word after payments that make the scheme look genuine. 1

Does a Ponzi scheme only target wealthy people?

No. Report Fraud says these schemes have affected people across different income levels. 1

Matching kit

After a Scam: What to Do First · £7 · Digital download.

A printable UK checklist for money, account and reporting steps. It is general information, not a recovery service.

General information, not legal, financial or personalised security advice. Secordit is not a police or bank reporting service.

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Sources

  1. Report Fraud, Ponzi schemes. Accessed 7 November 2026 (Europe/London).
  2. Report Fraud, Ticket fraud. Accessed 7 November 2026 (Europe/London).
  3. Report Fraud, Police impersonation alert and reporting routes. Accessed 7 November 2026 (Europe/London).
  4. Police Scotland, How to report a crime. Accessed 7 November 2026 (Europe/London).
  5. GOV.UK, Avoid and report internet scams and phishing. Accessed 7 November 2026 (Europe/London).