Ponzi scheme

A Ponzi scheme is a fraud that pays returns to existing investors using money from new investors, instead of from any real profit. It looks successful while new money flows in, but because there is nothing genuine behind it, it collapses when recruitment slows, and later investors lose their money.

High returns with little or no risk. That combination is impossible in real investing, where higher returns always carry higher risk. A guaranteed, unusually high return with no chance of loss is the clearest sign of a fraud.

They overlap. A Ponzi scheme centres on fake investment returns paid from new money. A pyramid scheme pays you mainly for recruiting new members. Both rely on a constant flow of new people and money, and both collapse when that flow stops.