A pyramid scheme is one in which the members make money through recruiting others into the scheme with money coming in from the new recruits to give to the members that had brought them in. A Ponzi scheme, on the other hand, has the founders bringing in new members who pay a fee, and that fee gets used to pay the members in order to make the business seem real. However, in a Ponzi scheme, the returns are not generated by actual profits but simply by new entrants’ money.