The Fraud Next Door: Confronting the True Scale of First-Party Fraud

First-party fraud, in which individuals use their real identities to obtain improper financial benefits, is estimated to cause more than $100 billion in annual U.S. losses and is difficult to detect because it depends on shifting consumer intent rather than false credentials. A Socure survey of 1,000 U.S. adults found that 35% acknowledged committing some form of this fraud, often citing economic hardship, with common behaviors including unwarranted online refunds, deliberate nonpayment of credit card debt, and disputes of legitimate transactions. Socure argues that public tolerance of certain forms of such fraud, combined with potential liability changes for authorized push-payment scams, could increase the problem. To address it, the company launched Sigma First-Party Fraud and the First-Party Fraud Consortium, whose founding members include SoFi, Green Dot, Ingo, Varo, and Public, to share cross-institution data. Analysis of more than 150 million transactions identified indicators associated with elevated risk, including multiple accounts closed for fraud, numerous authorized users, and accounts held across several participating financial institutions.

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