Affinity Fraud

AAA

DEFINITION of 'Affinity Fraud'

A type of investment scam in which a con artist targets members of an identifiable group based on things such as race, age, religion, etc. The fraudster either is, or pretends to be, a member of the group. Often the fraudster will be promoting a ponzi or pyramid scheme.

INVESTOPEDIA EXPLAINS 'Affinity Fraud'

This type of scam leverages and exploits the inherent trust within the group. For example, a fraudster may target a specific religious congregation. Oftentimes, the person will try to acquire the help of the leader of the group to spread the word about the investment scheme. In this instance, the leader becomes an unwitting pawn in the fraudulent scheme.

RELATED TERMS
  1. Mortgage Fraud

    Intentionally falsifying information on a mortgage loan application. ...
  2. Straw Buying

    When an individual makes a purchase on behalf of someone who ...
  3. Mini Madoff

    Financial con men that are accused of or have commited crimes ...
  4. Promoter

    An individual or company that, for a fee, helps raise money for ...
  5. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with ...
  6. Pyramid Scheme

    An illegal investment scam based on a hierarchical setup. New ...
Related Articles
  1. Economics

    Online Investment Scams Tutorial

    To bamboozle someone out of their money is an age-old ruse. Learn about some of the gimmicks modern-day swindlers use and avoid becoming a statistic.
  2. Active Trading

    What Is A Pyramid Scheme?

    The FTC announced it had opened an official investigation of Herbalife, which has been accused of running a pyramid scheme. But what exactly does that mean?
  3. Investing

    The Biggest Stock Scams Of All Time

    Where there is money, there are swindlers. Protect yourself by learning how investors have been betrayed in the past.
  4. Investing Basics

    How do regulators ensure that markets are conducted at arm's length?

    Learn about arm's length transactions and how the Investment Advisers Act allows stockbrokers to sell securities based on suitability reviews.
  5. Economics

    America's Most Notorious Corporate Criminals

    Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks.
  6. Savings

    What is the difference between an in-store and an online payday loan?

    Learn important differences between online and in-store payday loan companies. Explore different charges made by companies and assess their value.
  7. Investing

    What's the difference between legal defalcation and illegal defalcation?

    Discover what is meant by the term ''defalcation'' and how it can be used in multiple contexts to describe illegal or legal activities.
  8. Retirement

    What are the most common scams regarding Social Security benefits?

    Learn about some of the most common Social Security scams that occur by phone, email and direct mail, and how to recognize and report Social Security fraud.
  9. Investing News

    Educating Your Clients About Cybersecurity

    Financial advisors must lead the charge against cybersecurity risks, for their clients and for their own practices.
  10. Credit & Loans

    Are You A Target For Identity Thieves?

    The Americans at highest risk for identity theft and identity fraud aren't the ones you most expect. See if you're on the high-risk list.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center