Affinity frauds target members of identifiable groups, such as the elderly, or religious or ethnic communities. The fraudsters involved in affinity scams often are—or pretend to be—members of the group.

Fraudsters may enlist respected leaders from the group to spread the word about the scheme, convincing them it is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraud they helped to promote.

These scams exploit the trust and friendship that exists in groups of people. Because of the tight-knit structure of many groups, outsiders may not know about the affinity scam. Victims may try to work things out within the group rather than notify authorities or pursue legal remedies.

Affinity scams often involve Ponzi or pyramid schemes where new investor money is used to pay earlier investors, making it appear as if the investment is successful and legitimate.

In Iowa, affinity fraud is considered a serious criminal offense. The state's laws against fraud and deceptive practices, including the Iowa Securities Act, provide a framework for prosecuting such schemes. Affinity fraud typically involves the exploitation of trust within a group, often using group leaders to unknowingly promote fraudulent investments. These scams can take the form of Ponzi or pyramid schemes, which are illegal under both state and federal law. Victims of affinity fraud in Iowa are encouraged to report the crime to the Iowa Attorney General's Office or the Iowa Insurance Division, which oversees securities regulation. Additionally, federal agencies like the SEC (Securities and Exchange Commission) also have jurisdiction over securities fraud and may get involved in such cases. It is important for individuals to conduct due diligence on investment opportunities and be wary of schemes that promise high returns with little or no risk, especially when they target specific groups or communities.