Ponzi and pyramid schemes are both investment frauds. They both involve deceiving others by promising substantial income or returns on an investor's initial investment. Unlike a regular investment, these schemes can offer consistent profits only as long as the number of investors continues to increase. Once the number tapers off, so does the money. But there are inherent differences between the two. The investment manager of a Ponzi scheme will promise you substantially higher returns than any traditional investment with little to no risk. Investment strategies are often too complicated to understand and you may not receive any financial documents. The "returns" actually come from the incoming funds contributed by later investors. Pyramid schemes similarly offer big returns for little investment capital. However, they require individuals to pay an entrance fee and/or purchase products/services in order to participate. These people are then required to bring in more people to the scheme. People at the top are paid the most, receiving a portion of the money that the new recruits contribute. Those at the bottom of the pyramid make little to nothing, especially when no new individuals are recruited.