As one of the three major credit bureaus in the United States, Equifax has broad visibility into consumer credit behavior. In recent years, one notable trend has been the rise of first-party fraud, in which consumers knowingly exploit organizational policies for financial gain.
First-party fraud, sometimes referred to as consumer-engaged fraud or friendly fraud, can take many forms. One commonly cited example involves shoppers who purchase items online with the intent to return them and pocket the refund.
Equifax is leveraging its access to credit data to address two other prevalent forms of first-party fraud: loan stacking and credit washing. Loan stacking occurs when consumers rapidly apply for multiple loans with no intention of repayment, while credit washing involves attempts to remove negative information from a credit report.
To detect these patterns, Equifax is deploying its Credit Abuse Risk predictive model. The model’s primary objective is to identify suspicious application behavior in real-time, enabling lenders to be notified immediately and respond accordingly.
Justifiable Fraud
Stronger defenses are increasingly necessary, as first-party fraud has become the most common form of fraud. One reason for its growth is that many customers don’t view it as genuine fraud. Data from FICO found that nearly a third of respondents believe lying on credit applications is either justifiable under certain circumstances or simply common practice.
This mindset has been shaped by several factors, including digital anonymity and mounting economic pressure. In recent years, high inflation and elevated interest rates have ramped up financial stress, while credit card debt has prompted lenders to tighten underwriting standards.
As a result, some consumers feel validated in gaming their credit profiles or inflating details on loan applications.
When the Criminal Is a Customer
The proliferation of first-party fraud has created a new paradigm for the financial services industry, as threats increasingly originate from within the customer base rather than from external attackers. When the criminal is a customer, many organizations lack the tools and processes needed to identify and mitigate the threat.
Further muddying the waters is the emerging era of agentic commerce. As AI agents increasingly make purchases on behalf of consumers, organizations will face a host of new questions around responsibility in returns, accountability, and liability in cases of fraud—whether first-party or otherwise.