AFC Certification Pre-Assessment Exam| Questions with 100% Correct Answers (A Rated)

A local university alumni organization member has been using time at the monthly meetings to market their money management and investment services. They discuss very complex investment products and are promising annual investment returns which are double the current averages while saying they are "virtually risk-free." The president of the alumni organization sent out a letter to all of the members stating how the investment products were legitimate and that the president personally invested a great sum of money with the specific money manager. Clients should be most concerned about what type of investment fraud or scheme in this situation? a. Ponzi scheme b. Affinity fraud c. Pyramid scheme d. Internet investment fraud - ANSWER Affinity fraud - 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. They 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.