Socure: 40M Americans committed first-party fraud over the holiday season

A digital identity verification company claims one in eight Americans committed first-party fraud over the 2024 holiday shopping season.

This means 13 percent (around 43.5 million individuals) of the U.S. population exploited return and refund policies for financial gain, a practice referred to as first-party fraud or sometimes as “friendly fraud,” according to Socure.

These practices include disputing legitimate credit or debit card transactions, falsely claiming that a delivery has been lost or stolen to receive a refund, or making purchases via credit card or a ‘Buy Now Pay Later’ (BNPL) lender with no intention of paying it back.

“The holiday shopping surge is one of the busiest times of year for financial institutions and retailers,” says Ori Snir, Head of Product Management, Fraud and Identity Solutions at Socure.

“Despite increased consumer spending, rampant first-party fraud is doing tremendous damage to their bottom lines – and ultimately the U.S. economy.”

Socure calculated that the fraud costs U.S. businesses more than $100 billion annually, with $89 billion from chargebacks, promotional abuse and return fraud, and $18 billion in credit card losses.

Top offenders were younger shoppers with 40 percent of Gen Z admitting to the practice over the 2024 holidays, while Millennial and Gen Z consumers particularly like to use BNPL services. Wealthier consumers – defined as those with household incomes over $100,000 – were twice as likely to engage in first-party fraud compared to those with lower incomes (25 percent vs 11 percent).

More than a quarter of Americans (27 percent) say that they’re more likely to commit first-party fraud when purchasing holiday gifts, while nearly all offenders (90 percent) cited financial struggles, such as inflation and credit card interest rates, as their motivation.

In December, Socure announced “significant milestone achievements” for its First-Party Fraud Consortium – a collaboration where major financial institutions, fintechs, payment platforms, sports betting companies and merchants share data and insights in their fight against the practice.

A research report – America’s Naughty List: How Consumers Bend the Rules During Holiday Shopping – with additional data and analysis can be found here.

Article Topics

biometrics  |  digital identity  |  financial services  |  first-party fraud  |  fraud prevention  |  identity verification  |  Socure