The Growing Danger of Affinity Fraud: Would You Fall for It?
Listen to this articleWhen you shop online, you are careful about the types of merchants you deal with. And when your shopping spree is over, you check your credit card statements carefully to make sure no fraud has taken place.
When you pick up the phone and the caller on the other end of the line claims to be from Social Security or the IRS, you are justifiably suspicious. You know better than to reveal your Social Security number to an unknown caller, and you would never purchase gift cards to satisfy your bill for back taxes.
That vigilance can be highly protective, but it may not be enough to keep the bad guys out of your wallet. Affinity fraud is a growing threat in many communities, and this unique type of scam is as dangerous as it is insidious.
Affinity fraud takes many forms, from the can’t miss investment opportunity that drains your finances to the fake charity that preys on your good nature to the unregulated mutual fund or high yielding savings account that turns out to be riskier than advertised. But no matter what form it takes, affinity fraud hits hard, and just about everyone is at risk.
While affinity fraud often targets the elderly, it is not just older people who are at risk. Past affinity fraud schemes have victimized men and women of all ages, including individuals who were financially savvy and would never in a million years fall for an IRS, Social Security or tech support scam.
What makes affinity fraud so insidious is its familiarity. By now most people have been educated on common scams, and their suspicion levels rise when the phone rings or a pop-up shows up on their computer screens. But sometimes the scam artists doing the targeting are not on the other end of the phone line or computer screen. Affinity fraud hits much closer to home, taking advantage of trust and familiarity to separate victims from their money.
The perpetrators of the next affinity fraud could be sitting in the next pew at church, they could be a member of the same volunteer or charitable organization or they could even be your new best friend. But no matter where they come from, these scam artists can do enormous damage.
“Affinity fraud often takes the form of a so-called investment, and those that are scammed typically lose most if not all of their money.” Says Patrick Dwyer former Merrill Lynch Wealth Advisor. Sometimes the scam is a Ponzi scheme. Other times it is an unregistered investment trust or an unproductive oil well. The one thing these scams have in common is that they are designed to make the perpetrator rich, and the victim poor.
As with other such scams, education is the best defense. If you have elderly loved ones in your life, educating them about the existence of affinity fraud and how it works could save them a world of heartache – and a lot of money. And while you are protecting your older relatives, take a moment to educate yourself as well. You do not have to be unwise or unwary to fall victim to affinity fraud, and the more you know about these scam artists, the higher your level of protection will be.
