Affinity fraud most commonly involves which type of investment scheme?

Affinity fraud typically preys on members of a particular group, such as a religious community, ethnic group, or professional circle, leveraging the trust and relationships established within that group. Pyramid schemes are structured so that returns for earlier investors are paid using the capital from new investors, creating a cycle that can appear legitimate to those involved, especially when promoted by someone they trust.

The dynamics of affinity fraud effectively exploit this trust. Perpetrators often present themselves as part of the community and may use connections to gain credibility, making pyramid schemes appealing to group members who may not fully understand the inherent risks or the unsustainable nature of such investments.

In contrast, other investment types like real estate, stock trading, or government bonds may not necessarily rely on the trust dynamic inherent to affinity fraud, as these can appeal to broader market principles rather than community-based relationships. The most common scheme type associated with affinity fraud is indeed pyramid schemes, where the referrals and recruiting of new members can be closely tied to the social bonds within the community.