Ponzi scheme

A scam where money from new investors is used to pay earlier investors rather than real profits.

Did you know?

The term is named after Charles Ponzi, who ran a famous version of this scam in the 1920s. Ponzi schemes can often be confused with pyramid schemes. Both are similar, but a Ponzi scheme pretends to be an investment by paying old investors with new investors' money. A pyramid scheme, on the other hand, doesn't claim to sell a product; it simply functions by recruiting new people.

Recent trends

Ponzi schemes are adapting to today's digital landscape, with fraudsters moving into crypto, NFTs, and other online assets that are harder to regulate. Social media has also boosted recruitment, as influencers are used to build credibility and hype.

← Back to Full Glossary

* Restrictions and exclusions apply. Click here to read full details of insurance coverage. Residents of New York receive $1 million of coverage and are not eligible for ransomware coverage. Click here for New York insurance summary.
^ These features require you to authenticate your identity with TransUnion. This will not impact your credit score.
◊ Elite Plan includes a combined maximum benefit of $50,000: $25,000 for scam protection and $25,000 for ransomware protection. Coverage is in addition to, and does not reduce or limit, ID theft insurance.
† Family Plan: Scam and ransomware protection coverage up to $100,000, the aggregate limit (up to $50,000 per adult member: $25,000 in scam protection and $25,000 in ransomware protection). Family plan primary member may share insurance coverage with household members.
|| This feature is included on the OmniWatch Elite and OmniWatch Family Plan.

Ponzi scheme

Did you know?

Recent trends

Related terms