Affinity fraud and trust within financial markets

Abstract

Purpose

The purpose of this paper is to illustrate how a financial fraud which originates as an affinity fraud can utilise the interpersonal trust, which is a central feature of an affinity fraud, to move the fraud into situations such as organizational markets, where personal relationships are much less dominant.

Design/methodology/approach

Sources of information consisted of scholarly articles and articles retrieved from the web.

Findings

The trust which develops naturally between members of a community with common interests can be exploited by a fraudster who is, or purports to be, a member of that community. This trust can then be used as the basis of creating trust within other types of relationships – especially where some people are active in more than one relationship – where personal relationships play a minor role.

Practical implications

Both individuals and organizations when making investments should regularly formally evaluate their relationship with the organization in whom they are investing; constantly evaluate alternative relationship opportunities; and, calculate how divergent the partner's behaviour can be from the expected before dissolving the relationship.

Originality/value

This paper, by utilizing Fiske's Relational Models Theory, argues that trust that has been developed in a communal situation can be used to build up a momentum of trust. This enables the perpetrator of a fraud to extend the fraud into situations where different types (and possibly impersonal) relationships operate.

Citation

Blois, K. and Ryan, A. (2013), "Affinity fraud and trust within financial markets", Journal of Financial Crime, Vol. 20 No. 2, pp. 186-202. https://doi.org/10.1108/13590791311322364