Fraud is not news anymore. People commit fraud in more than one way now beyond stealing money – personal data, for example. These criminals pose as people who want to do something beneficial to another person, but their true intentions are masked. They lead with a front that it might be so difficult to doubt them, and it may be too late to find out their intentions – often after you must have been scammed. And while this happens, reports have shown that these criminals do one of three types of fraud – first party fraud, second party fraud, and third party fraud. 

first party fraud

1st party fraud is common; if one can avoid this, the others shouldn’t be difficult. Thus, this article guide discusses how to detect first party fraud and ways to protect yourself in the future. 

What is First-party Fraud?

First Party Fraud is when someone or a group of people misidentifies or reports inaccurate information about themselves to obtain valuable information. It simply involves representing oneself with another identity to steal someone else’s identity, financial details, or personal information and use it for illegal purposes. 

A person who commits this crime is called a first party fraudster. 

First party frauds are common in various life aspects but have shown great popularity in credit, bank, or government loan applications. These individuals falsely represent themselves by providing wrong information about themselves, their employment, and their income. They are opportunistic and organized in their approach, creating a synthetic identity to get what they want with no intention of paying back. 

Examples of First Party Fraud

There are different types of first-party fraud, each marked by the strategy used by the fraudster in scamming their victims. In this case, victims are financial institutions, retailers, credit companies, and private or public organizations. Below are 10 examples of first party fraud known as: 

1. Chargeback Fraud 

Chargeback fraud is one of the many first-party fraud schemes. It involves someone purchasing an item with a credit card and then reporting the transaction to their credit card company. They tell the company that there was a fraudulent attempt with their credit card and would like a refund. This technique is often used because scammers know merchants have no power over chargebacks. 

2. Bust-Out Fraud

The Bust-Out Fraud is exactly as it sounds. It is a quick attempt at scamming financial institutions and credit card companies. It involves a fraudster applying for a credit or bank loan and then spending some time building the credit profile to the highest maximum. Once it is at a good level, they use all their credit and close such an account. 

3. Government Loan Fraud

Apart from financial institutions and corporations, governments even get scammed. The criminal provides false information about themselves in an attempt to be a beneficiary of a government loan or benefit. Once such a person gets the loan, they close the account, never to open it again. This fraud was quite popular during COVID when people applied for a Paycheck Protection Program (PPP). 

4. Friendly Fraud

Friendly Fraud is also another type of chargeback fraud under the first-party scheme. It mostly involves a credit card holder completing a purchase transaction and then filing for a chargeback without a significant reason. The thing about Friendly Fraud is that it is a two-way street – it may or may not have been intentional. Nevertheless, they will be walking away with the purchased items after visiting the bank to file a chargeback. 

5. Sleeper Fraud 

The Sleeper Fraud is almost similar to the Bust-Out Fraud. It also involves individuals obtaining credit and gradually building their profile like a regular customer. Then after building some level of trust with the credit card provider, they seek more credit. Due to their long years of trustworthiness, the credit card company provides them with more. Once they cash in, the account becomes closed, never to be opened again. 

6. De-Shopping 

De-Shopping is another common type of scam. It is also called “Wardrobing.” It involves shopping for an item and then returning it to a merchant after use while asking for a refund. They get whatever value they want from the item and later return it to a merchant with an excuse of the item not functioning or the incorrect choice. So, instead of getting an alternative, they seek a refund. 

7. Fronting

Fronting is the most common first-hand party fraud. It is simply identity theft. It involves setting up an account in someone’s name or identity and taking advantage of such an account. Once the scammer has exhausted the financial advantage of such a new account, they move on to another. In retrospect, the fraudsters put their victims at a financial disadvantage, making them access certain loans or acquire low insurance rates.  

8. Address Fronting

Address Fronting is also like the Fronting technique – only that it involves putting in a wrong address in this case. When scammers apply for credits or bank loans online, they complete the application by entering a fake address for anonymity and minimal risk. 

9. Muling

Muling is an extended type of fraud. It involves someone allowing a third-party fraudster to use their personal information. 

A third party fraud is the most common because it fully involves identity theft because of unauthorized access to sensitive details. 

The third-party fraudster will use the person’s account to commit all sorts of atrocities and eventually close the account. 

10. Goods Lost in Transit Fraud (GLIT)

Goods Lost in Transit is another type of fraud. It involves individuals claiming to have not received items purchased online. In some cases, these individuals falsely claim that the products were damaged before they got to them. A common pattern with GLIT Fraud is that these individuals always ask for a full refund by returning empty packages. 

How to Protect Yourself from a First Party Fraudster?

After learning about the first party fraud types, the next is an attempt at prevention. Being a victim of fraud is never a good experience, which is why it is important to know how to protect yourself. Here are vital things to consider. 

first party fraudster

1. Identify the Red Flags

The first step in prevention is to identify the red flags. Fraudsters always follow a particular pattern – they are calculative, organized, and opportunistic. They know what to do or say; however, being aware of these certain things will help. The major red flags are: 

  • When a cardholder orders the same product multiple times, there is a good chance that such a person is a fraudster. They are looking for ways to claim chargebacks or ask for a full refund. 
  • When a cardholder requests an item to be delivered to an undisclosed location, such a person has ulterior motives. 
  • Another way to tell is from the person’s banking history. If a fraudster operates an account, such an individual is likely to spend large. The operating time is usually midnight from a different location. 

2. Always Be Prepared for these Fraudsters

Several fraud cases have been reported that it isn’t news anymore that the slightest transaction online has a modicum of scam. The best way to get through this experience is to be prepared. Setting some measures beforehand to protect yourself is important. You can start by learning to identify bad transactions and check out the trending patterns. You may still not be 100% safe, but at least you will know how to spot a fraud from a mile away. 

3. Utilize Technology Solutions

Another tip is to invest in first party fraud detection tools. In this case, technology solutions come to the rescue. Some software can be installed on your mobile device or computer that can spot a scam. These software often have fraud alert features to help you recognize and ignore first-party fraud. These technology solutions have repeatedly proven effective, as they block suspicious activities. They have also helped customers protect their data from fraudsters. 

4. Review all Financial Transactions

Fraud has grave consequences, which is why it is consequential never to leave your finances unchecked. By reviewing all financial transactions regularly, you can tell when there is a disparity in your finances. 

How Can Radaris Help?

Sadly, many people are fraud victims every day. Apart from the fact that they will lose good money to these criminals, their identity is compromised, which will put them at a disadvantage. Thus, in a bid to stop these evil perpetrators, Radaris.com has come to help.

Radaris is an open-source site with vast information gathered from various sources. It can be used to prevent first party fraud and reveal the identity of a scammer in some cases. This technology tool only requires that you provide basic information about someone, and it will run a search based on their digital footprint. If someone is operating under a false identity, this site will prove that so you don’t end up doing business with them. 

Conclusion

By definition, first-party fraud is a first person scam that involves someone falsely identifying themselves to obtain certain benefits or gain advantages. It is a common problem, and many have become victims of it over the last decade. While these criminals get successful by the hour, people need to level up their knowledge of fraud and beat them at their own game. This article has shown exactly how to do that and recommended Radaris to help discover the fraudster’s identity.

FAQ

How to Identify a First Party Fraudster?

Based on reports from various cases of first-party fraud, there are stereotypes. They are usually male and often in their 20s to early 20s. They mostly live in urban areas and spend most of their time on the internet. 

On the days they don’t, they are either funding a perfect lavish lifestyle or struggling with finances. Finally, they are quite persuasive (or convincing).

By this description, it feels like most guys are first-party fraudsters. Well, you can never know for certain until they get close enough, attempting to impersonate you. 

Is First-Party Fraud Inevitable?

There is no perfect answer to this. 

First-party fraudsters often develop techniques to scam their victims. So, while you focus on preventing one, they might try another.