Named after Italian businessman Charles Ponzi, one of masterminds of a popular scam in the 1920’s.
It is a type of fraud where investors are lured with the promise of quick and large returns by making them believe in a non- existent business. The money paid by new investors is used to pay back the money to older investors and so on without any real growth or profit.

Example:
Rekha wanted to invest to grow her money without informing anyone in the family. She was paying 10 rupees everyday under the promise made by the company that she will get 1 lakh by the end of year. She was given no document and she would receive that 1 lakh only if she would add 3 more people. Such schemes are examples of ponzi schemes