Buy Now, Pay Later Will Fuel Identity Fraud: 2022 Fraud Trend Series
Blog post from Socure
Identity fraud detection is portrayed as reaching a pivotal moment in 2022, with first-party fraud expected to grow as criminals exploit customer-friendly policies and gaps in credit reporting. The rapid expansion of Buy Now, Pay Later services, projected to rise from $24 billion in sales in 2020 to $100 billion in 2021, has created particular exposure because many providers use soft credit inquiries and do not report accounts to national credit agencies, limiting visibility into consumers’ borrowing activity. Pandemic-driven digital commerce and BNPL offerings aimed at credit-invisible consumers, including flexible installment plans and limited credit checks, have accelerated adoption of services such as Klarna, Affirm, and Afterpay, while also attracting fraudulent activity. The author predicts that widespread prequalification practices and possible economic pressures will further increase first-party fraud, urging BNPL providers and similar businesses to adopt stronger identity verification and fraud prediction tools.
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