Affinity fraud is a type of money scam specifically targeted at tight knit groups like religious organizations, ethnic communities, workplaces and social clubs. Affinity fraud can also involve other types of fraud including Ponzi or pyramid schemes. The Ponzi scheme is a type of fraud where existing investors are payed from new investors and promise to invest your money to generate high returns with little to no risk. Pyramid schemes is a form of "making money" and involves promising payment, services or ideals. This scheme mostly tricks people into taking part with fraudulent schemes.

Scammers of affinity fraud usually approach a member(s) of a group or organization by promising high rates of return for a "can't miss" investment. Affinity fraud has similar red flags as investment fraud or other types, but can be missed due to the trust of the group members have in each other. Some warning signs to look out for include:

  • New members of the group or organization who come forward with investment opportunities.
  • Scammers that guarantee higher rates of return with little to no risk.
  • Claims that are made by the scammer as a special opportunity, and are only available to members of the group.
  • "One time offers" that you "can't miss out on".
  • If the scammer requests group members to not tell others about the investment or to get any independent opinion on it.

When trying to prevent affinity fraud, the best thing to do is to stay educated on the warning signs and to research all investments you plan to make. When you are planning on making an investment as a group or organization, the following tips will help you and the rest of the members make the most informed decision.

  • Find the registration of the company or person who is selling or advertising about securities. CSA's National Registration Search is a good tool for investors to use when checking registration of sellers.
  • It is important to not judge a seller's integrity solely on how they may sound or appear. Thorough research helps unveil their true intentions.
  • Disciplinary history is important to check to find out if the person or company has broken any regulatory rules. CSA will also have this information.

It is also important to have details from the investor of your investment in writing. Scammers often try not to leave a paper trail, and often make claims that the investment will be gone before it can be put into writing.

Lastly and most importantly, if it seems to good to be true it most likely is. If you believe your group or organization is being affected by affinity fraud, report it to the police immediately.