First-Party Fraud

First-party fraud, also known as friendly fraud or chargeback fraud, involves a cardholder disputing a legitimate transaction by providing false information to their bank. This can happen either knowingly or unknowingly. The dispute might arise from the cardholder's denial of involvement in the transaction or misrepresentation of the transaction's nature.

The term is also applicable in scenarios where an individual uses false identification to open a new financial account. In these cases, the fraudster intentionally misleads the financial institution by presenting themselves as someone else or by fabricating their financial status or personal details.

This type of fraud poses significant challenges for merchants and financial institutions as it can be difficult to distinguish from genuine cases of fraud. Consequently, it leads to financial losses and can complicate the processes of risk management and customer service. Detecting and preventing first-party fraud requires sophisticated tools and approaches, including advanced analytics and stringent verification procedures.