First-party fraud occurs when an individual deliberately misrepresents their identity, financial status, or intent to repay, to gain access to credit or services, such as applying for a loan or credit card without any intention of fulfilling their repayment obligations. In contrast to third-party fraud, where the fraudster uses the identity of another person or uses a synthetic identity, the perpetrator of first-party fraud is the account holder themselves.
Use case/ examples for first-party fraud
Loan fraud: Taking out a personal loan with no intention of making any repayment, despite providing their accurate personal information to obtain the loan.
Credit card fraud: Applying for credit using their own identity, with the intention of immediately defaulting on the debt after reaching the card limit.
