What is first, second and third party fraud?

New Zealand
New Zealand New Zealand
Consumers make most of their payments by internet banking
  • 74%
  • 70.5%
  • 54.5%
  • 46.5%
  • 39.6%
  • 40.7%
  • A higher percentage make payments via internet banking to banks and insurance companies, telcos, and retailers, respectively, compared to the regional average
  • Impact: Anti-fraud capabilities critical to the increased digital transaction frequency and customers’ trust in banks
Australia Australia
Consumers are most satisfied with the post-fraud service of banks and insurances companies
  • More than 70% satisfaction rate compared to 59.7% on average
  • Impact: Increased trust in BFSIs
Indonesia Indonesia
Consumers that encountered most fraud incidents in the past 12 months

AP Average

  • 49.8% have experienced fraud at least once compared to 34.7% on average
  • Impact: Overall anti-fraud capabilities need improvement
Singapore Singapore
Consumers have the highest trust towards government
AP Average
  • 75.5% choose government agencies, compared with 51.7% on average
  • Impact: Trust of personal data protection is centered around government agencies
Vietnam Vietnam
Consumers encountered most fraud incidents in retail and telco during the past 12 months
  • 55%
  • 54.5%
  • 32.8%
  • 35.2%
  • 55% and 54.5% have experienced fraud at least once in retail and telco, respectively, compared to 32.8% and 35.2% on average
  • Impact: Overall anti-fraud capabilities need improvement
Thailand Thailand
Most Thai consumers believe speed and resolution are severely lacking (response/ detection speed toward fraud incidents)
AP Average
  • 60.5% think it is most important, compared to 47.7% on average
  • Impact: Response time as one of key factors to fraud management to retain customers and gain their trust
India India as standalone
Consumers have the largest number of shopping app accounts in the region
  • Average of three accounts per person
  • Impact: Highest exposure to online fraud
Hong Kong
Hong Kong Hong Kong
The least percentage of consumers with high satisfaction level toward banks and insurance companies’ fraud management
AP Average
  • Only 9.7% are most satisfied compared to 21.1% on average
  • Impact: effective response towards fraud incidents to be improved
China China
Consumers are the most tolerant toward submitting and sharing of personal data
AP Average
  • 46.6% compared to the AP average of 27.5% are accepting of sharing personal data of existing accounts with other business entities
  • Impact: higher exposure of data privacy and risk of fraud
Japan Japan as standalone
Consumers most cautious on digital accounts and transactions
50.7% Actively maintain digital accounts’ validity
27% AP Average
45.5% Do not do online bank transfers
13.5% AP Average
  • More than 70% did not encounter fraud incidents in past 12 months, compared to 50% on average
  • Impact: Relatively low risk of fraud

What is first, second and third party fraud?

What is first, second and third party fraud?

The Covid-19 pandemic has meant a sea change in the way we live, work, play, spend, save and borrow. What has that meant for lenders and consumers? How has it changed fraud threats and trends, including fraud protection?


The pandemic has accelerated demand for digital and online customer experiences. To keep pace, businesses have rapidly transformed their operations to accommodate new digital services and onboarding capabilities, while fulfilling consumer expectations for fast, easy, and secure interactions.


However, the rapid rise in digital activity has created new opportunities for fraudsters, exposing businesses and consumers to increased risks of fraud, identity theft and data breaches. In this blog, we’ll look at the different types of fraud and the latest fraud trends and insights.



Read full article


By Experian 11/18/2021

Related Articles

Five fraud threats to watch for during economic recovery
Five fraud threats to watch for during economic recovery

We take a look at some key fraud threats that can impact businesses and consumers.

Learn more
Enter the age of digital onboarding
Enter the age of digital onboarding

As nearly all activities shift to online channels, one of the biggest challenges facing organisations is knowing with confidence who they’re doing business with.

Learn more
2021 Global Identity and Fraud Report
2021 Global Identity and Fraud Report

The surge in digital demand over the past year reinforced the deep connection between recognition, fraud prevention and the online customer experience.   Experian’s 2021 Global Identity and Fraud Report…

Learn more
  • First party fraud

    An individual, or group of people, misrepresents their identity or gives false information when applying for a product or service to receive more favourable rates or when they have no intention of repayment.

  • Second party fraud

    An individual knowingly gives their identity or personal information to another individual to commit fraud or fraud is perpetrated on their behalf.

  • Third party fraud

    An individual, or group of people, create or use another person’s identity or personal details to open or takeover an account without the consent or knowledge of the person whose identity is being used.


What is first party fraud?


First party fraud is where a person, or group of people, knowingly mispresent their identity or give false information to gain financially. For example, by not being truthful about their employment or financial circumstances to get a home loan they might not otherwise be eligible for.


It also refers to instances when an individual makes a promise of future repayments in exchange for good and services without the intent to repay. For example, applying for a loan or credit card they won’t pay back.


Common types of first party fraud include:




Setting up a service in someone else’s name to save money. For example, a young driver obtaining cheap car insurance by applying under their parent’s name and nominating themselves as the named driver.



Buying items such as clothes with the intention of using them before returning them for a full refund.

Claiming non-delivery

Claming non-delivery

Ordering goods online and falsely claiming that they haven’t been delivered to get a refund.

Chargeback fraud

Chargeback fraud

Denying buying an item on a credit card to get a refund from the card provider.


What is second party fraud?


Second party fraud is where an individual knowingly gives their identity or personal information to another person, to commit fraud.


Businesses can find it hard to detect and challenge. This is because the person whose identity is being used to commit fraud has knowingly allowed it to take place. This means the usual traces or behavioural characteristics associated with fraud are harder to spot. The individual may refuse to acknowledge they were involved, making it difficult for businesses to prove without firm evidence.


Money muling is where an individual is persuaded into allowing someone else to use their bank account to transfer money in and out in return for a fee. The money being moved is often the result of criminal activity, so this is money laundering.


It can also refer to consumers who are persuaded to use their own information to obtain credit or merchandise on behalf of a larger fraud ring. This type of fraud became more prevalent in 2020 as more people worked and shopped online during the pandemic. The Australian Federal Police (AFP) reported an increase in money mule scams during 2020 targeting those impacted by the Covid-19 seeking to work from home.


Young people are particularly vulnerable to this type of fraud. They are often unaware that money muling can have years of consequences. From having your account closed and making it harder to obtain banking, credit and mortgage services, to fines, a criminal record and even a prison sentence.

What is third party fraud?


Third party fraud is where an individual’s identity or personal details are used without their consent or knowledge, to gain credit or products. It also includes manufactured identities, with the fraudster creating a new identity using stolen and false information.


Third party fraud is associated with organised criminal activities. Up to 50% involves fraud rings using multiple consumer identities. As consumers went online during the pandemic and took advantage of internet shopping, so did the fraudsters. From January to October this year, the Australia Competition and Consumer Commission (ACCC) revealed a 50% increase in reports to Scamwatch than the same period last year with losses increasing by 87% to the tune of $236m.


Common scams during the pandemic included impersonation scams, superannuation scams and online shopping scams to steal personal and financial information.

Fraud trends to watch


Our recent 2021 Global Identity and Fraud Report, based on input from 9,000 consumers and 2,700 business executives worldwide, revealed notable changes in consumer preferences and the focus of businesses throughout the pandemic.


With more people than ever buying and transacting online, fraud prevention has become increasingly critical and it’s vital that businesses embed it smoothly within their customer journeys. If businesses want to continue to meet customer expectations while upholding security standards in the digital marketplace, they need to redouble their efforts in fraud detection and prevention.


Customer journeys need to be designed with the right security checks built in. Otherwise, as digitisation accelerates and customer onboarding and acquisition strategies bring new lending on board, fraud-related losses will continue to rise. The consequence will be a deterioration in trust from customers and, while short-term acquisition goals may be realised, long-term losses will be the ultimate consequence.


Our research highlights some key focus areas for businesses in the year ahead:




Last year businesses moved fast to meet the growing demand for digital transactions. According to our research, businesses are looking to technology to help make the customer journey a more fluid and positive digital customer experience.

Investment priorities

Investment priorities

The top investment priorities for the year ahead for Australian businesses include:

    1. Investing in advanced analytics and artificial intelligence (53%)
    2. Investing in fraud detection software and methods (52%)
    3. Increasing internal staff / support for digital operations (30%)

57% of Australian businesses said they expect to increase their fraud management budget.

Customer authentication and fraud management

Customer authentication and fraud management

Our research found that business attitudes towards fraud detection and prevention have remained constant since before the pandemic. Security questions (28%) and security measures on customers’ devices (26%) are the most common fraud detection and protection solutions Australian businesses said they were using.


However, consumers are increasingly ready for invisible means of security, with more willing to have businesses manage their security and privacy without their overt involvement.



How we can help your business prevent fraud


At Experian, we have a proven track record in delivering solutions to protect businesses and their customers. We can help you build trusted relationships with legitimate customers at every touchpoint, with solutions that address risk and provide safeguards at every stage of the customer journey across industries.


Fraud Share New Zealand combines national secure data sharing with world-class fraud detection and investigation software to provide comprehensive fraud protection. Fraud Share provides the platform and a single point of reference upon which participating organisations can collectively build an in-depth view of fraud to enhance fraud detection and prevention. Find out more here.


Whether you’re looking for fraud prevention, online identity checks or a host of other solutions to keep fraudsters at bay, we’re here to help. To get in touch with us, please complete the form below.


Would you like more information? Please complete the form below and a member of our team will be in touch shortly.

  • Submit
By providing your personal information you agree that we may collect and process it in accordance with our Privacy Statement.