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First-Party Fraud in Ecommerce: How Digital ID Verification Can Help

First-party fraud in e-commerce, where customers make false transaction claims, is a growing concern. Discover how digital ID verification can mitigate these risks by ensuring authentic identities, preventing chargebacks, and enhancing trust. <br><br>Read More: https://ftxidentity.com/blog/first-party-fraud-guide/?utm_source=slideserve&utm_medium=PPT&utm_id=Offpage&utm_term=First-Party Fraud in Ecommerce: How Digital ID Verification Can Help

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First-Party Fraud in Ecommerce: How Digital ID Verification Can Help

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  1. FIRST-PARTY FRAUD IN ECOMMERCE How Digital ID Verification Can Help

  2. First-party fraud occurs when account holders exploit policies for personal gain, making it harder to detect than identity theft. A typical example is 'friendly fraud,' where customers dispute legitimate charges. A 2023 Socure study found that 35% of Americans admitted to first-party fraud, and 40% knew someone who did. This widespread issue resulted in over $100 billion in annual losses for U.S. financial institutions and merchants. What Is First-Party Fraud?

  3. Types of First-Party Fraud 1. Chargeback Abuse (Friendly Fraud) Customers sometimes report unauthorized transactions for refunds even after receiving goods, causing businesses financial loss and security challenges. 2. Return Fraud Wardrobe shopping, which involves buying, using, and returning items for a refund, is on the rise, especially for events like weddings. Retailers are combating this with stricter return policies and tracking. 3. Gift Card Fraud Scammers use stolen credit cards to buy gift cards for resale or personal use, then falsely claim non-receipt for refunds. This fraud is hard to track and costly.

  4. Types of First-Party Fraud 4. Lost in Transit Fraud This fraud occurs when customers falsely claim they did not receive a delivered order to get a refund or replacement despite having received the product. 5. Item Not as Ordered Fraud This fraud occurs when customers falsely claim to have received wrong or damaged items, often with fake evidence, in order to get a refund or replacement. 6. Ghost Funding Fake accounts exploit payment systems and promotions by making unauthorized transactions and abusing discounts intended for genuine users.

  5. Why Solving First-Party Fraud Is So Difficult How Weak Verification in Ecommerce Enables FPF Insufficient identity verification during account creation allows for fake accounts. Identifying first-party fraud is challenging as it's hard to distinguish between honest mistakes and intentional abuse. Lack of strong transaction monitoring allows suspicious activities to be overlooked. For example, an online retailer selling high-end electronics might face a customer disputing a laptop purchase, claiming non-receipt. The retailer must then prove delivery and manage costly chargebacks. Weak return policies allow fraudsters to easily commit return fraud. Inadequate delivery confirmation processes lead to lost-in-transit fraud claims.

  6. Digital Identity Verification to Prevent (FPF) First-Party Fraud Verifying Real Customers When conducting an e-commerce transaction, the customer is typically not present in person. Consequently, verifying their identity becomes significantly more difficult. Liveness Detection During checkout, customers take a selfie. Facial recognition with liveness detection ensures they're real, not a photo or mask, preventing fraud with stolen credit cards or identities. Account Match Verification The selfie can be matched to a submitted government ID photo, verifying the purchaser's identity and reducing the risk of fraudulent transactions using compromised accounts.

  7. Digital Identity Verification to Prevent (FPF) First-Party Fraud Improving the Dispute Process Preventing Lost in Transit (LIT) Fraud Strengthens Identity Proof Account History Reduces Unnecessary Chargebacks Linked Information Gives Content for Disputes Deterrence Prevents Fake Accounts Preventing Return Fraud Account History Deterrence

  8. Contact Us • +1 (256) 319 3470 • info@ftxidentity.com • www.ftxidentity.com

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