How to spot ‘friendly’ fraudsters

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The opportunity sounds so enticing: It offers high returns at no risk, an easy way to make money and support the community at the same time and, best of all, it’s been blessed, approved or sponsored by a trusted organization’s leaders. But wait. Some of the most amazing opportunities presented to groups that share a common language, faith, ethnicity, age or profession are in fact, affinity frauds.

What is affinity fraud?

An affinity fraud is any type of scam that targets a close-knit collection of people and relies on their commonalities to entice them into the deal. The perpetrators associate themselves with the group and manipulate the members’ good intentions or aspects of their shared identity to gain their trust. Group leaders may be involved, deliberately or inadvertently, in helping to promote the scheme.

Virtually any type of fraud can become an affinity scam, says Monica Vaca, assistant director of the division of marketing practices at the Federal Trade Commission in Washington, D.C. Indeed, many of the scams are neither new nor innovative, but instead, age-old devices adapted to exploit the group’s characteristics.

“It could be a job scam, a business opportunity scam, a medical insurance scam, a pyramid scheme. The only difference is the way that they are developing those trust relationships,” she says.

How affinity fraud works

While anyone may be the target of a scam, affinity frauds tend to be perpetrated against groups that are excluded or separated from other reliable sources of information, says Joe Ridout, consumer services manager at Consumer Action, a nonprofit consumer rights group in San Francisco. Examples of such groups include first-generation immigrants, church members and U.S. military personnel.

“In a lot of affinity scams, the target is experiencing a genuine exclusion from mainstream society on the basis of language, race, religion, age or other characteristics that place victims in a much more vulnerable position,” Ridout says. “The exclusion fuels the growth of the swindle.”

Affinity fraud can be difficult to detect because victims may not know where to turn for help, may be reluctant to challenge or expose leaders who are involved, or may be concerned that they participated or brought others into the scam themselves. As a result, some scams continue for decades until they are stopped.

Warning signs

Red flags that suggest an “opportunity” may be a scam include the following. 

  • High returns or highly desirable benefits at little or no risk or effort.
    “Someone who is promising outsized returns is likely trying to swindle you,” Ridout says.
  • An offer that’s secret, confidential, made only to certain people or based on “insider” information.
  • A scheme that’s not based on a legitimate product or service, but instead rests on a requirement that participants rope in others to get paid or receive points or rewards.
    “If you get paid by bringing other participants into the organization, that’s a serious sign that it may not have any revenue coming in to support (itself),” Ridout says. “Eventually, the supply of new victims dries up … and the scheme collapses.”
  • A “once-in-a-lifetime” deal that generates excitement because “everyone is doing it.”

How to avoid affinity fraud

  • Do your own research. Contact reputable sources to confirm all of the information about the opportunity. Don’t rely on online forums, which may be infiltrated by perpetrators or their associates.
  • Check out affiliations. Some scams aren’t even officially sponsored by the very groups from which they claim to have received an endorsement.
    “Folks should ask a lot of questions and not use their faith or reliance on their ties with that organization as a basis for trusting what that person has to say,” Vaca says.
  • Never give anyone money or personal financial data solely on the basis of an affinity relationship such as a common ethnicity, language or religious faith.