Affinity fraud is referred to as a fraud amongst friends. The scammer will target religious, ethnic, culture, or career and interest groups. He then joins the group and gains the trust of their most respected members. He will gradually build a bond with these group members so that he can have an influence or an “affinity” with the group. Once he has gained a respected member’s confidence he is introduced to others and as credibility is built he bilks the group.
These professional fraudsters know how to build trust. Once they gain the trust of the group the scammer will begin to speak to the upper most prominent members of the group about a few investments that are making him good money. He will explain it in such an in depth way that it will begin to sound like it’s a low risk or even guaranteed. It may be in the form of property or off shore investments, whatever it is, if it sounds too good to be true, it usually is.
Once he can say that these key group members are buying into the investment he has everyone right where he wants them. If the scammer can gain the trust of a few key members in this group, he can usually gain the trust of almost anyone in the group.
The actual fraud taking place is a pyramid scheme where the scammer will use money from new investors to pay the earlier investors to gain further trust from the new investors. Once they hear that the first group of investors have made money, and they will tell everyone in the group, word will spread and everyone will be buying into the investment.
Once people stop buying or the scammer reaches the goal he has set for himself, he disappears with everyone’s money. These fraudsters are usually never heard from again and are difficult to find.
The saddest part to this article is that in most cases the authorities are never contacted. The people are too embarrassed to admit that they were scammed and in most cases they try to work things out within the group. If you feel that you have been a victim of any investment schemes you should contact your local securities commission. If you don’t take a stand they will move on and they will do it to someone else.
How can you prevent it?
Call your local securities commission to check if the person is regulated and that the investment itself is regulated and registered.
If you feel that someone is rushing you or pressuring you, be weary.
Do your research on the person and the investment before you make a decision. Most investments don’t vanish overnight.
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