First-party fraud

Someone using their own real identity, intending never to pay.

The person is exactly who they say they are. What is false is their intention, such as borrowing money they never plan to repay or lying on an application to get approved.

Misrepresentation by a genuine account holder for financial gain, with no impersonation involved.

First-party fraud shows up in several common ways:

• Bust-out fraud, in which a customer builds good credit, then maxes out every line and disappears.
• Friendly fraud, in which a customer disputes a legitimate purchase to get a refund while keeping the goods.
• Application misrepresentation, in which an applicant lies about income, employment, or other facts to qualify.

Because the person is genuine, the usual checks have little to find:

1. Identity verification confirms the real person, so the check passes.
2. The account behaves normally at first.
3. The deception appears later, in how the account is used or repaid.

First-party fraud sits next to terms that are easy to mix up:

• Third-party fraud uses someone else's identity, while first-party fraud uses the fraudster's own.
• Second-party fraud involves a person the account holder knows and gave access to.
• Synthetic identity fraud builds a person who does not exist, while first-party fraud uses a real one.