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Affinity fraud: Insidious, damaging and not uncommon

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It’s natural to want to trust someone you share a community with. Maybe it’s another member of a tight-knit professional organization, or someone who goes to the same place of worship that you frequent. You can identify with them – so they can’t be a bad person, right?

Unfortunately some people take advantage of this natural trustworthiness, using the status of this community to defraud its members. And this tactic, called affinity fraud, happens more frequently than many people realize.

The basics of affinity fraud

The concept of affinity fraud is simple. As the FBI explains, it is when a fraudster leverages the “bonds of trust” between members of identifiable groups to exploit those same people. The perpetrator may actually be part of that group, or simply claim to be. Either way, they are banking on the group’s clout being enough for victims to openly trust them.

Members of the Church of Jesus Christ of Latter-day Saints are frequent targets, but all types of religious groups can be susceptible to this fraud. CNBC recently described religious-based affinity fraud as “rampant” in the U.S.

Other potential targets include:

  • An ethnic community
  • A professional organization
  • A community group
  • Family associations
  • Notable clubs

 

While affinity fraud often feeds money into a ponzi or pyramid scheme, it can fuel any type of financial crime.

As is always the case, you should approach any investment opportunity with skepticism, no matter who it comes from. Do your homework, verify information with other sources and remember if anything sounds too good to be true, it likely is.

If you believe an investment you made might be bad and part of a fraudulent scheme, it’s important to reach out to an attorney right away. They can explain your legal options and help you determine the best next step.