As one of the three major credit bureaus in the United States, Equifax has extensive insight into consumer credit behavior. Recently, a notable trend is the increase in first-party fraud, where consumers exploit organizational policies for financial gain.

First-party fraud, often called consumer-engaged or friendly fraud, can manifest in various ways. A common instance involves shoppers buying items online with the intention of returning them and keeping the refund.

To combat this and other forms of first-party fraud—such as loan stacking and credit washing—Equifax is utilizing its access to credit data. Loan stacking happens when consumers apply for multiple loans without any intention of repayment, while credit washing involves attempts to remove negative information from a consumer’s credit report.

The detection strategy includes the use of Equifax’s Credit Abuse Risk predictive model. The primary goal of this model is to identify suspicious application behavior in real-time, alerting lenders immediately and allowing them to take necessary actions promptly.

Justifiable Fraud

Stronger defenses are becoming essential because first-party fraud has become the most common type of fraud. One reason for its growth is that many customers do not view it as genuine fraud; data from FICO indicates nearly one-third of respondents believe lying on credit applications can be justifiable under certain conditions or simply a common practice.

This perspective is influenced by various factors, such as digital anonymity and increasing financial stress. Recent years have seen high inflation and elevated interest rates intensifying financial pressures, while rising credit card debt has led lenders to tighten their underwriting standards. These circumstances contribute to consumers feeling justified in manipulating their credit profiles or inflating details on loan applications.

When the Criminal Is a Customer

The rise of first-party fraud marks a new era for financial services, as threats now often come from within the customer base rather than external attackers. When the criminal is a customer, many organizations lack the necessary tools and processes to identify and mitigate such risks.

Additionally, the advent of agentic commerce complicates matters. As artificial intelligence agents increasingly make purchases on behalf of consumers, organizations must navigate new questions regarding responsibility in returns, accountability, and liability for fraud—whether first-party or otherwise.