A Ponzi scheme promises high returns with little or no risk. Early investors receive payments, but these come from new investors' money — not actual profits.

**How it operates:** 1. Promoter promises exceptional returns (10-20%+ monthly) 2. Early investors receive promised returns, building trust 3. Satisfied investors recruit friends and family 4. Money from new investors pays "returns" to earlier investors 5. Promoter takes a large cut for themselves 6. Scheme collapses when new investments slow down

**Why it works:** - Early investors genuinely receive money, so they spread the word - Exclusive "opportunity" creates urgency - Affinity fraud targets tight-knit communities who trust each other - Complex or secretive "strategies" discourage questions