How to spot a money scam

Many Bengalureans have lost crores of rupees to affinity frauds conducted through chit fund networks and kitty parties (see box). Affinity fraud refers to investment scams where fraudsters prey on victims through shared community or group connections.

Why do we fall?

K Jaishankar, principal director and professor of criminology and justice sciences at the International Institute of Justice and Police Sciences, says fraudsters rely heavily on psychological manipulation. “Social psychology shows we tend to trust those we perceive as part of our ‘in-group’ — based on language, faith, profession, or hobbies,” he explains. Fraudsters study group dynamics and use them to their advantage.

A Bengaluru-based behavioural analyst and psychologist, who did not wish to be named, adds that group pressure plays a role. “Fraudsters sometimes plant accomplices who pretend to invest. When others seem to commit, you hesitate to appear overly sceptical,” he says.

Who is targeted?

Avatthi Ramaiah, professor at the Tata Institute of Social Sciences, says scamsters often exploit regional and religious sentiments. “People looking to make quick money — especially homemakers and the elderly — are drawn to promises rooted in caste- or faith-based trust,” he says.

Psychotherapist Tasneem Nakhoda adds that victims are carefully chosen. “Scammers often target young people eager to prove themselves, as well as the elderly and low-income groups,” she says.

Red flags

Tasneem says it’s not just the scheme design but also the scammer’s presentation that makes the con believable. “They speak charmingly and build familiarity through emotional or personal remarks — like ‘You remind me of my sister’,” she explains.

Once rapport is built, the fraudster poses as a mentor. She adds: “They may share stories of past financial mistakes to appear trustworthy. Urgency and social proof are common tactics — they may name-drop celebrities (being their friends) or say there are only two days left to join. If you hesitate, they may turn defensive or drop the friendly act, which is a red flag.”

Jaishankar adds that scammers often dodge direct questions and make vague excuses like claiming to have forgotten about or to not be aware of a topic.

Ramaiah warns: “A major red flag is when a scheme sounds too good to be true — like promises of doubling your money quickly or offering high returns.”

How to stay alert

Tasneem advises people not to act on impulse. “Even if you’re convinced, pause and say you need time to think,” she says.

Jaishankar recommends talking about scams within families. “Use news reports to start non-judgemental conversations. Follow the ‘two-person rule’ — never make a financial commitment without checking with someone you trust,” he says. Always verify through official sources or reliable third parties.

What happened

In a recent case, Tomy A V and Shiny Tom, a couple from Kerala, who ran a chit fund company in the city, allegedly fled to Kenya after cheating investors out of over Rs 40 crore. Most of their victims were reportedly Malayalis.

In another case, Savita G was arrested for duping members of her kitty party circle of Rs 5 crore through a “money-doubling” scheme.