Tuesday, December 16, 2008

Disaffinity Marketing

On KFI this morning, Wayne Resnick (filling in for Nobel Peace Prize nominee Bill Handel) made a passing mention to "affinity scams." In this case, it was in relation to the Bernard Madoff Ponzi scheme scandal.

Aidikoff, Uhl & Bakhtiari explain the connection:

Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster’s ruse....

Many affinity scams involve "Ponzi" or pyramid schemes, where new investor money is used to make payments to earlier investors to give the false illusion that the investment is successful. This ploy is used to trick new investors to invest in the scheme and to lull existing investors into believing their investments are safe and secure. In reality, the fraudster almost always steals investor money for personal use. Both types of schemes depend on an unending supply of new investors - when the inevitable occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone.

While Madoff targeted some prominent Jewish organizations, this is not just a Jewish issue:

Baptist investors lose over $3.5 Million

The victims of this fraud were mainly African-American Baptists, many of whom were elderly and disabled, as well as a number of Baptist churches and religious organizations located in a number of states. The promoter (Randolph, who was a minister himself and who is currently in jail) promised returns ranging between 7 and 30%, but in reality was operating a Ponzi scheme. In addition to a jail sentence, Randolph was ordered to pay $1 million in the SEC’s civil action.

However, when you think about it, affinity is an important thing. Not only do scams often depend upon affinity, but legitimate fundraising efforts also depend upon affinity. Has your alma mater written you lately? If so, have they sent you wonderful, warm pictures of your hallowed halls in an attempt to get you to pull out that credit card?

But there's something more powerful than affinity marketing, and that's disaffinity marketing. In some cases you can identify the disaffinity by the organization or project name - Make Poverty History, Californians Against Telephone Solicitation, Impeach Bush Coalition, Stop the Mormons, Stop the ACLU. But sometimes you have to dig a bit deeper. In April, Fox News printed excerpts from a John McCain fundraising letter:

"Barack Obama's foreign policy plans have even won him praise from Hamas leaders," the McCain letter says. "We need change in America, but not the kind of change that wins kind words from Hamas, surrenders in Iraq and will hold unconditional talks with Iranian President Ahmadinejad."

During that same month, Howard Dean sent out a letter on behalf of the DNC. MSNBC quoted from it:

The DNC chairman contends that McCain is, in fact, “as conservative as they come,” and his administration would preserve “the radical right’s hateful social agenda.” He adds, “Like President Bush,” McCain follows a “shoot first, ask questions second” foreign policy strategy, supports tax cuts for the wealthy as well as corporations that ship jobs overseas, and promises to appoint “Bush-style” judges who will overturn Roe vs. Wade.

So why does disaffinity marketing work so well? I bet that Brian "Bex" Huff could explain it better than I, but suffice it to say that we are often motivated by fear, or self-preservation. If you feel threatened by poverty, telemarketers, George W. Bush, the Mormons, the ACLU, or whoever, then you may be motivated to part with your money to take care of the threat. Let's face it - even the Obama campaign, which was sometimes perceived as having more positivity than Norman Vincent Peale and Robert H. Schuller combined, often relied on negative motivation - Obama was against Bush, against the Iraq War, against selected members of the Keating Five (but not others), etc.

So donate to this blog now, or else...or else...sorry, I can't think of something that's worse than this blog. Carry on.

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