How can you avoid affinity fraud?

  • Be aware of new members joining your group or community and pitching an idea that sounds too good to be true. Be wary of them asking you for money for investments or special projects. These new members will often attach themselves to the influential leaders of the group in order to gain trust and develop a friendship with them. If they join the group and ask for money, they will be even quicker to leave with your cash.
  • No matter what kind of investment or project you are investing in, always exercise due diligence on the investee. This can include performing internet searches, inquiring with current unrelated investors, asking for written documents on the opportunity or project (such as an offering memorandum or business plan), and seeking outside independent expertise to evaluate the legitimacy of the investment or project. Many victims of affinity fraud conduct little or no due diligence. They witness other members blindly following the culprit, and as a result, do so themselves.
  • Be aware of fraudulent get-rich-quick investment schemes. More often than not, the white-collar criminal will say statements such as, “The investment has no or little risk and high rewards” or, “The investment is a once in a lifetime opportunity!” The organizer will sometimes put pressure on the investor to invest quickly or they will lose out on the opportunity. In addition, they could respond to requests for more information with a statement such as “The investment is highly confidential.”