Exploring the Rise of First-Party Fraud
Equifax, one of the major credit bureaus in the U.S., has a wide reach into consumer credit behavior. In recent years, there has been a notable trend towards first-party fraud, where consumers deliberately take advantage of organizational policies for financial gain.
This type of fraud is sometimes known as consumer-engaged or friendly fraud and can manifest in various ways. An example involves online shoppers purchasing items with the intention of returning them to claim the refund.
To tackle two other prevalent forms of first-party fraud—loan stacking and credit washing—Equifax has introduced its Credit Abuse Risk predictive model. This tool helps identify suspicious application behavior in real time, alerting lenders promptly to enable timely action.
Understanding Justifiable Fraud
Given the rising prevalence of first-party fraud, stronger defenses are essential. A significant factor driving this trend is that many consumers do not view it as actual fraud. According to FICO data, nearly a third of respondents believe lying on credit applications can be justified under certain circumstances or is generally accepted practice.
This mindset has been influenced by several factors, including online anonymity and increasing financial pressure due to high inflation and elevated interest rates. These conditions have led to greater credit card debt, prompting lenders to tighten underwriting standards in response.
These changes have caused some consumers to feel justified in manipulating their credit profiles or inflating details on loan applications.
Fraud from Customers
The growing incidence of first-party fraud has transformed the financial services industry. As threats often originate from within the customer base rather than external actors, organizations need better tools and processes to identify and address these issues.
The rise of agentic commerce adds another layer of complexity as AI agents make purchases on behalf of consumers. This shift raises new questions about responsibility in returns, accountability, and fraud liability—whether first-party or otherwise.
