Are pyramid schemes legal in the UK?

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Pyramid schemes are an old-fashioned scam, and different versions have existed for decades. But, as the UK’s fraud reporting centre Action Fraud has noticed, we’re seeing more and more new ones surfacing on social media, designed to target younger people.

Pyramid schemes are illegal, and people who create, run or promote them can be prosecuted under government legislation called the Consumer Protection from Unfair Trading Regulations 2008.

Pyramid schemes are illegal and unsustainable

Pyramid schemes are often disguised as a quick way to make money. They usually rely on you paying to join, then persuading other people to sign up and pay too. Those people are asked to do the same thing, and the chain keeps going. People make money when other people pay into the scheme (rather than by selling a product or service). And the only people who usually profit are the ones who create them in the first place.

Schemes like this are unsustainable and illegal. If you join one, you could end up losing hundreds of pounds. And if you create, run or promote one, you could go to prison.

Joining a pyramid scheme is risky

  • You’ll probably lose all your money. Bank transfers move money out of your account instantly, meaning they’re almost impossible to cancel.

  • Your friends and family could lose out too. If you think you’ve found a good opportunity to make some extra money, and persuade your friends or family to sign up too, they’ll probably also lose their money when the scheme collapses.

  • Your bank account could be frozen. If you recruit people to join a pyramid scheme, you’re at risk of your bank freezing or even closing your account.

  • If you run or promote a pyramid scheme, you could go to prison. Starting, operating or promoting a pyramid scheme is illegal, which means you could end up in prison.

How to spot a pyramid scheme

You can spot a pyramid scheme by looking for these signs:

  • Before you can join, they ask you to pay an upfront ‘gift’, ‘fee’ or ‘investment’ by bank transfer

  • They ask you to recruit more and more people to join as well, and encourage you to sign up your friends and family

  • They say you could make lots of money, really quickly

If you’ve paid into a pyramid scheme

If you’ve unwittingly paid into a pyramid scheme, don't feel bad! This kind of fraud is very common, and fraudsters can be clever.

Once you realise you’ve been scammed, you should take steps to report the scheme and see if you can get your money back.

  • Tell your bank immediately. If you use Monzo, you can do this by contacting us through in-app chat or by ringing 0800 8021 281. We can try contacting the bank where you sent your money to see if we can get it back.

  • Report it. You can report what happened to Action Fraud or call Police Scotland on 101 if you live in Scotland.


At Monzo we work hard to protect you from fraud and help you keep your money safe. Learn more about how on the blog.