Legal information notice: this article provides general information and isn't a substitute for advice from a qualified lawyer.
Early investors are paid on time, referral bonuses are generous, and the returns are far above anything a bank offers. Then withdrawals slow, the office closes, and the promoters go silent. That is the shape of a Ponzi scheme: returns to older investors are paid out of money brought in by newer ones, and it collapses once fresh money dries up. India has a specific law aimed at this — but using it well starts with a prompt, well-documented complaint.
The Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act) bans unregulated deposit schemes and is designed to protect small investors from Ponzi-type operations. It defines a deposit broadly — money received with a promise of return, with or without interest, and even a return in kind or service. Schemes must be regulated by a recognised regulator such as the RBI or SEBI or under specific laws to be lawful. Accepting unregulated deposits is punishable with imprisonment from 2 to 7 years and a fine of ₹3 lakh to ₹10 lakh; repeat offenders face stricter punishment. The Act also lets a government-appointed Competent Authority provisionally attach the property of the deposit taker, and a Designated Court decides on confirming attachment and distributing assets to depositors.
Other laws can apply as well, such as the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, SEBI’s rules on collective investment schemes, and state-level laws protecting depositors’ interests, along with cheating provisions of the Bharatiya Nyaya Sanhita.
Bringing in friends or family increases the harm and can expose you to complaints later. Do not pay any “release” or “membership renewal” fee.
Collect receipts, bank statements, agreements, brochures, referral records, the promoters’ names and addresses, and all chats.
Approach the local police or the state’s Economic Offences Wing with your documents and ask for an FIR to be registered. Ask for the case reference so it can be tracked.
Report at cybercrime.gov.in or 1930 so receiving accounts can be flagged.
For unauthorised deposit-taking or lending, the RBI’s Sachet portal accepts complaints; for securities-market angles, use SEBI SCORES where a registered entity is involved.
If many investors were affected, complaints made together — with matching documents — help authorities see the scale, and attachments under the BUDS Act are usually pursued on that basis. Avoid anyone who approaches you afterwards offering guaranteed recovery for a fee.
| Regulated | Ponzi-Style |
|---|---|
| Registered with a recognised regulator; details verifiable | No clear registration or a vague 'company' name |
| Returns depend on performance and are not guaranteed | High, fixed and steady returns |
| Business and risks explained in documents | Profit source unclear; secrecy about operations |
| No pressure to recruit others | Commissions for referring new investors |
No. Filing a police complaint, a cyber crime report, or a regulator complaint is free.
You can file the complaint yourself. Because schemes often involve many victims and property attachment, a lawyer can help you organise claims, follow the process before the Competent Authority and Designated Court, and represent you if needed.
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A genuine investment has a real business or regulated structure and does not guarantee returns. A Ponzi scheme pays earlier investors from later investors’ money and collapses when new money stops.
The Banning of Unregulated Deposit Schemes Act, 2019, bans unregulated deposit schemes, punishes those who run them, and allows a Competent Authority to attach property to repay depositors.
Accepting unregulated deposits carries imprisonment of 2 to 7 years and a fine of ₹3 lakh to ₹10 lakh, with harsher punishment for repeat offenders.
Recovery depends on the promoters’ traceable assets and can take a long time. Prompt complaints and documentation improve your position, but recovery is not guaranteed.
Referral involvement can invite scrutiny. Stop recruiting, document your role honestly, and consider legal advice if you referred others.
The local police or Economic Offences Wing for an FIR, the cyber crime portal for online payments, and the RBI’s Sachet portal or SEBI SCORES where relevant.
This article is for general information only and does not constitute legal advice. Recovery depends on the facts and the assets available.
