Affinity Fraud

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.

BREAKING DOWN '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. Ponzi Scheme

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

    An illegal investment scam based on a hierarchical setup. New ...
  3. High-Yield Investment Program - ...

    A fraudulent investment scheme that purports to deliver extraordinarily ...
  4. Reloaded

    A slang term meaning that a consumer who was previously defrauded ...
  5. Ponzi Mania

    The seemingly sudden recognition of Ponzi schemes following the ...
  6. Mock Auction

    A scam in which con artists work as a team to sell low-quality ...
Related Articles
  1. Economics

    Investment Scams: Different Types Of Scams

    Very few of the scams on the Internet are new. Most of the swindling techniques we see today originated long ago as telemarketing, direct mail, or even door-to-door selling schemes. But the ...
  2. Investing

    What Is A Ponzi Scheme?

    Protect yourself from scams by learning the structure behind this fraudulent investing scheme.
  3. Economics

    Investment Scams: Conclusion

    Now that you're familiar with the various kinds of online investment scams, we hope you'll be prepared for anything the fraudsters throw at you. We'll be happy if this tutorial saves one person ...
  4. Home & Auto

    Baby Boomers Beware: Financial Fraud That Targets Seniors

    Unfortunately, you can never retire from being the target of financial scams.
  5. Investing

    6 Ways to Avoid an Investment Ponzi Scheme

    Investments that promise high returns with little risk are everyone's dream – but if they could also be a Ponzi scheme. Here's how to protect yourself.
  6. Investing

    What Is A Pyramid Scheme?

    Find out how this financial scam works and why you should watch out.
  7. Personal Finance

    How to Avoid the Top Financial Advisor Scams

    Investors need to be wary of financial advisor scams. Here are the most common and how you can protected yourself.
  8. Personal Finance

    Recognize And Avoid "Work At Home" Scams

    From pyramid schemes to envelope stuffing, there are a lot of scams masquerading as legitimate part-time work.
  9. Personal Finance

    Watch Out For These Top Internet Scams

    The Internet had make it easier than ever for scammers to trick people into giving away their money and personal information. These are the scams to avoid.
  10. Entrepreneurship

    Multi-Level Marketing

    Learn how to differentiate between a legitimate marketing strategy and a pyramid scheme.
RELATED FAQS
  1. What is the difference between a Ponzi and a pyramid scheme?

    Pyramid schemes and Ponzi schemes share many similar characteristics in which unsuspecting individuals are fooled by unscrupulous ... Read Answer >>
  2. How does a pump and dump scam work?

    A pump and dump scam is the illegal act of an investor or group of investors promoting a stock they hold and selling once ... Read Answer >>
  3. What are the top Social Security scams targeted at the elderly?

    Prevent Social Security scams by learning to recognize the most common types of scams that target senior citizens receiving ... Read Answer >>
  4. What is a risk pyramid and why is it important?

    Learn about the risk pyramid and what it is used for; discover why it is important for investors to use the risk pyramid ... Read Answer >>
  5. What are some famous scandals that demonstrate the agency problem?

    Learn more about the agency problem and find a few famous examples. Find out what contributes to these problems and how investors ... Read Answer >>
  6. What kinds of acts pertaining to interests in collective investment schemes are excluded ...

    Learn about some of the kinds of acts related to collective investment schemes that are excluded from regulation as financial ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center