Steps to Avoid Affinity Fraud

Trust is Fine, But It Doesn't Replace Due Diligence

What is Affinity Fraud? Law enforcement officials advise that before investing money, there are a few important points to keep in mind:

  • Do your homework. Understand the investment and do research about the person you are investing with—even if you have an existing relationship with that individual. “Trust is fine,” said Special Agent Michael Pickett, “but it does not replace due diligence.”

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Put Snap Diligence to work and discover not only whether the individual has been sued, but what other business he or she may be running and whether they have been sued.

  • Don’t make investments behind closed doors. Talk to friends, family members, or financial professionals about the possible investment, and be wary if an individual tells you not to mention the investment opportunity to others.
  • If an investment sounds too good to be true—with returns that greatly outweigh the risk—be suspicious. Also beware of high-pressure tactics that pressure you to act quickly.
  • Be an informed consumer. Financial fraudsters are savvy salesmen and expert manipulators. They have an answer for everything. Verify their pronouncements through independent sources.

More Resources

Vet Any Investment Advisor with FINRA and with your State’s Securities Board.

  • If any red flags are raised about a potential investment or investment advisor, call your local regulatory agency and speak to someone. If you live in or near Utah, you can also consult the White Collar Crime Offender Registry online.
  • If someone tries to use their affiliation with a church or social organization to entice you to make an investment, you have every right to be suspicious, no matter what your relationship is with that person.


Read the FBI's original article here.