Affinity Scam

Affinity Scam

Scammers leave no stone unturned to pitch out money from innocent individuals who are not aware of fraudsters who exist only to swindle money. One such type of scam is the affinity scam. This scam is related to money, investments and financial instruments.
Everything you need to know about affinity fraud. Who, what, when, where and why of affinity scam!

Who are affinity fraudsters?

There exists group of individuals who join together to form small investment company that lures specific categories of people who are vulnerable to fall prey to affinity fraud. Affinity fraudsters need not necessarily be a group of people; instead affinity scammers can come in the form of a fake investment bank, an illegitimate stock broking firm, a fraud stock broker and so on.

What is affinity scam?

Affinity scam is a kind of investment scam where the scammer promotes a fake investment scheme or a financial plan that will help the investor earn huge amounts of profits within a short span of time. Scammers convince the innocent public to invest in schemes, securities and other types of financial instruments by misrepresenting information that investors use to make decisions.

When was the highest sentence punishment given for an affinity scam?

Known as one of the biggest affinity scams ever, was recorded in late 2008. The scammer is known to have swindled $65 billion through a fake Ponzi scheme scam. Popularly known as the ‘Madoff investment scandal’ this scam was a fake ponzi scheme in stock and securities fraud. The scammer is known to have sent fake balance sheets that showed they invested money were doing well. Ultimately when the market crashed, and when investors started to pull their money, Madoff was unable to provide the money. The scammer was sentenced to 150 years in prison with a fine of $170 billion in restitution.

Top losses Madoff Investment Scandal

Where do you find maximum cases of affinity fraud?

Of all the reported cases in affinity fraud, most number of affinity scams are said to be recorded in America, where the innocent people lose out an estimated amount of $50 billion annually

Why do fraudsters indulge in affinity fraud?

Affinity fraud is an investment scam. Scammers find it easy to lure people by presenting illegitimate options to them that will easily make them money. Most vulnerable targets include non-working women homemakers, elderly retired individuals and groups of people from the same religion, caste or community. It becomes easy for scammers to target these people who easily fall prey to fake investment schemes and plans.

How to avoid falling prey to affinity fraud

  • No matter how promising the invest opportunity might appear, if it sounds too good then there should be definitely something fishy

  • Any type of investment is subject to market risks, hence if someone approaches you with "100% guaranteed returns", then there you need to exercise caution

  • Always ask for written documents that support your investment details. Any investment or contact just on the basis of word of mouth is a thing to worry about

  • Any firm, company, organization or individual forcing up the scheme to you for a limited period of offer needs to be investigated. A word of advice would be to invest after evaluating every possible aspect of the opportunity well

  • Do not believe in promising emails or any opportunity or investment schemes that comes up via the mail or messages or phone calls. Take time to research the company approaching you, arrange for personal meeting and then go about with it

  • Any scheme that involves you to find referrals for investment in the scheme is an example of Ponzi scheme, and most of the ponzi schemes are built with an aim to conduct fraud and grab the innocent user's money. So avoid entering into pyramid or ponzi schemes.

  • Research well before shedding out money, about the individual, the firm, the broking company or any other source that brings to you such types of investment schemes.