Which of the following indicates the likelihood of losing money in a pyramid scheme?

The correct choice reflects the significant financial risk associated with pyramid schemes, particularly highlighting the overwhelming likelihood that late-stage investors will incur substantial losses. In a pyramid scheme, returns are primarily generated through the recruitment of new participants rather than from legitimate business activities. This creates a structure where only those at the top of the pyramid benefit, while those who invest later are left with little to no return on their investment, often losing nearly all their contributions.

The indicated loss rate of 93%-95% for later investors underscores the systemic flaws of these schemes. As the structure relies on a constant influx of new recruits, the further down the line an investor is positioned, the more challenging it becomes to recover any money, as there are simply not enough new investors to sustain the promised returns for those already invested. This mirrors the realities of many historical pyramid schemes, where late participants face near-total financial defeats. Understanding this aspect is crucial for recognizing the risks and red flags associated with these fraudulent schemes.