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 Rhode Island, affinity fraud is considered a type of investment fraud and is illegal under both state and federal law. The state's securities laws, enforced by the Rhode Island Department of Business Regulation's Securities Division, prohibit fraudulent practices in the sale of securities, which includes affinity fraud. These laws aim to protect investors from deceitful schemes that exploit trust within groups. Additionally, federal securities laws, enforced by the Securities and Exchange Commission (SEC), also apply to affinity fraud. The SEC often prosecutes such cases when they involve interstate commerce or national securities exchanges. Victims of affinity fraud in Rhode Island can report the fraud to the state's Securities Division or the SEC and may also have the option to pursue private legal action against the perpetrators. It is important for individuals to conduct due diligence before investing and to be wary of investment opportunities that come from within trusted groups, especially those promising high returns with little or no risk.