Affinity Fraud: Abusing the Trust Within the Community


Affinity frauds are one of the vilest, fraudulent investment schemes around, where a group of scammers exploit the trust of a social, religious or racial faction (affinity groups) by depriving them of their money they have collected from their members. Many times, these frauds go unnoticed because the victims choose not to report it to law enforcement agencies.

Targets of affinity fraud

Different communal groups sharing the same interests are often the target of these fraudsters. Let's go through some of the common types of affinity groups that get conned by swindlers through sham investment schemes.

Ethnic, racial and immigrant groups

Ethnic minorities and immigrants are used to live in close-knit settings to protect each other and for better feeling of safety. These affinity groups are born out of fear of persecution and suffering of disparity in the society. Members of such minority groups live very cautious lives. This lifestyle also reflects in their investment decisions where they are inclined to trust people from their own group.

This careful approach of the community members is played against them when fraudsters from the same ethnicity or immigrant group rip their brethren off by using that trust.

Religious groups

Different denominations and churches have their own community groups. Fraudsters, intended to carry out affinity fraud, infiltrate into these groups. People from the group put their trust in swindlers because victims think that they also practice the same esteemed moral values preached and practiced in the group.

Group of professionals

Certain workforces also have their own affinity groups. Many people find it comfortable to deal with the group of people sharing the same profession with them. Fraudsters pretend to be associated with a certain profession use the trust among the group to scam some fellow professionals.

Why are affinity frauds difficult to curb by law enforcers?

Since most of the affinity groups are very clannish in nature and therefore, if any affinity fraud occurs there it doesn’t get reported by the victims. Many times victims chose not to go with legal proceedings and try to sort it out within the group. On other occasions, victims also get pressurized by influential individuals of the group to not go all out against fraudsters because it will tarnish the reputation of the group.

Modus operandi in affinity frauds

The shared trait of fraudulent affinity investment is the promise of unbelievable high returns on the investment in a very short time. Usually affinity scammers use two types of security frauds.

Pyramid schemes

Here investors are required to invest capital and have to acquire new investors to get more profits. Profits to the initial investors are compensated from the money coming from new investors that encourages the initial investors to invest more in the scheme. Since no money is coming from any external source as there doesn’t exist any actual profit stream, therefore pyramid schemes collapse in few months.

Ponzi investment

Ponzi investments share the same method of fraud of pyramid scheme where one group of investors is compensated from the capital of the other group. However, there is less involvement of investors and therefore ponzi schemes sustain for longer.

In both of the schemes, swindlers vanish when they have scored enough money from the victims and when it becomes impossible to sustain the fraudulent investment plan.

Avoiding Affinity frauds

There are some tips you must follow to avoid getting ripped off by an affinity investment fraud.

Don’t fall for the trust

Foundation of affinity frauds is based on the misuse of trust. Therefore, if you even know the person making the investment offer, don’t just rush into it. Don’t get blindfolded by the trustworthiness of the person, access the nature of investment no matter what. Before investing, consulting an expert can also help.

Don’t get affected by herd mentality

Don’t put your money into an investment just because a fellow group member has done the same.

Always insist for paperwork

Due to excessive reliance on trust and bond, people don’t even bother to get any assurance in writing in case of fraudulent affinity scheme. Don’t follow this ill practice; always insist for necessary paperwork and guarantees in writing.

In case of any such fraud, report it to the respective authorities and hire a legal counsel instead of handling the matter on your own.


Posted On December 26, 2017