A pyramid scheme is a type of investment scam where participants earn money primarily by recruiting new members rather than selling products or services. Each new recruit pays a fee, which is then distributed to earlier participants. This structure creates a pyramid shape, with a few people at the top making significant profits while most participants lose money. Pyramid schemes are illegal in many countries because they are unsustainable and often lead to financial losses for the majority of participants. As the scheme grows, it becomes increasingly difficult to recruit new members, causing the pyramid to collapse and leaving many without returns on their investments.