Is it true that a pyramid scheme promotes recruitment of new members to increase returns for existing investors?

The statement is true because pyramid schemes fundamentally rely on the recruitment of new members to generate returns for earlier participants in the scheme. In these fraudulent operations, existing members are promised profits primarily from the fees paid by new members rather than from any legitimate business activity. As new members are added, their investments serve to pay returns to those who joined earlier, creating a structure resembling a pyramid, where the financial benefits primarily flow upward. Eventually, the scheme collapses when it becomes impossible to recruit enough new participants, leaving the majority of members at the bottom with significant losses. Thus, the focus on recruitment as a means of generating returns accurately characterizes how pyramid schemes operate.