A. Affinity fraud is a type of scam that preys upon members of close-knit groups, such as church or social club members, those who are part of ethnic communities or racial minorities, coworkers, and the elderly. Even members of the military have been targets.
Many affinity frauds are Ponzi or pyramid schemes, in which money from new investors is paid to earlier ones to give the impression the investment is successful.
To help avoid becoming an affinity fraud victim, follow these tips:
- If you know the person making the offer — no matter how trustworthy — act as though you don’t. Research the person’s background and the investment offer. Sometimes those making pitches are victims themselves without realizing it.
- Never invest solely on the recommendation of a member of a group to which you belong. Be especially wary of pitches made through online groups, chat rooms or bulletin boards catering to an interest you have.
- Don’t fall for promises of spectacular, “once in a lifetime” profits or “guaranteed” returns with little or no risk. These are classic signs of fraud.
- Reject the opportunity if you can’t get the promoter to put everything in writing.
- Be suspicious if you’re told to keep the opportunity confidential.
- Don’t be pressured into something before you have time to research it.
- Just because someone you know claims to have made money doesn’t mean that’s true or that you will also make money.