You've heard of identity fraud, but did you realize that the fastest-growing area of consumer fraud often begins in your own community? Affinity fraud, a crime in which people in your own ethnic, religious, career or community- based group - or in your circle or family of friends - use this familiarity to induce you into making fraudulent investments, is on the rise.
All across the country, people of all groups - young and old - let down their financial guard when approach by those with whom they have a connection. After all, they're "just like you" and they wouldn't swindle someone in their community, right? Wrong. Affinity fraud victims regularly lose tens of thousands of dollars to those they know. Sometimes the group member is the mastermind, while other times a group member will act as the unknowing pawn in a greater scam.
More incredibly, community con artists are less likely to be turned into the authorities. Many groups feel uncomfortable about alerting police to one of their own, so they deal with the wrongdoer within the group, preventing the information from getting out and helping others.
What can you do to avoid affinity fraud?
If the investment, company or salesperson isn't registered, that's reason enough to decline. Never take the word of the salesperson or fall for the promise of a "ground floor" investment, simply because he or she knows other people in your family or community!
For more information, contact the North American Securities Administrators Association (NASAA), the oldest organization devoted to investor protection, toll-free at 1-888-84-NASAA.