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 Kansas, affinity fraud is considered a type of securities fraud and is illegal under both state and federal law. The Kansas Uniform Securities Act (KUSA) prohibits fraudulent and deceptive practices in the offer, sale, or purchase of securities. Affinity fraud typically involves the use of deception or misrepresentation to induce members of a group to invest in a fraudulent scheme, often a Ponzi or pyramid scheme. When such fraud targets specific groups, including the elderly or religious or ethnic communities, it can be prosecuted under the relevant provisions of the KUSA. Additionally, federal securities laws, enforced by the Securities and Exchange Commission (SEC), also apply to affinity frauds. These laws make it illegal to defraud investors or manipulate investment markets. Victims of affinity fraud in Kansas can report the matter to the Kansas Securities Commissioner or the SEC and may also have the option to pursue private legal action to recover their losses. It is important for individuals to be vigilant and to verify the legitimacy of investment opportunities, even when they are presented by seemingly trustworthy members of their own community.