is a form of investment fraud in which the fraudster preys upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or successfully pretend
to be – members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent
investment is legitimate
and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.
These scams involve exploitation of the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail
authorities or pursue
their legal remedies
, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join
Many affinity scams involve "Ponzi schemes" or pyramid schemes, where newly received investor money is used by the fraudster to make payments to earlier investors to give the illusion
that the investment is successful. This ploy is used to trick new investors to invest
in the scheme and to lull existing investors into believing their investments are safe and secure. In reality
, the fraudster almost always steals investor money for personal use. Both types of schemes depend on an unending supply of new investors; when the inevitable
occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone.