RBS Business Banking | Ponzi and pyramid scams

About pyramid and ponzi schemes

Investors usually find most or all of their money is gone, and the fraudsters who set up the scheme claimed much of it for themselves.

The essential difference between a Pyramid scheme and a Ponzi scheme is that a Ponzi schemer will only ask you to invest in something. A victim would not be asked to take any more action than handing over money. The fraudster will claim to take care of the rest and give the returns later. The Ponzi Schemer is the mastermind behind the whole system and is always shuffling money from one place to another.

Affinity fraud occurs where criminals target members of a group – such as community, religious, ethnic, elderly or professional groups – to invest in a scheme. These scams are often pyramid or Ponzi schemes.
The scammers who use affinity fraud often are – or pretend to be – members of the group they are targeting. This makes the scams emotionally damaging, as well as financially, as the fraudsters can spend years building trust before carrying out the swindle. 

Sources for further information


• FSA’s Description of Ponzi and Pyramid Scams www.fsa.gov.uk
• ActionFraud’s Website for Reporting Fraud and Internet crime www.actionfraud.police.uk
• National Fraud Intelligence Bureau www.nfib.police.uk
• Money Advice Service on Scams www.moneyadviceservice.org.uk/en/categories/scams-and-identity-theft

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