First-Party Fraud Becomes the Dominant Threat in Global Cybercrime Landscape

The New Face of Cybercrime: First-Party Fraud Takes the Lead

Recent data unveils a concerning trend in the realm of cybercrime. LexisNexis® Risk Solutions has just published its annual Cybercrime Report, revealing that first-party fraud has surpassed traditional scams to become the leading form of cyberattacks worldwide. In 2024, this type of fraud accounted for 36% of all global fraud incidents, a significant rise from just 15% the previous year. This shift highlights a changing landscape in criminal behavior online, largely driven by factors such as rising living costs and economic instability.

Understanding First-Party Fraud

First-party fraud refers to deceitful activities where individuals misrepresent their personal or account details for financial gain. Common examples include submitting inaccurate information when applying for loans or disputing valid purchases to obtain refunds, known as “friendly fraud.” Such fraudulent behavior is exacerbated by economic pressures, particularly during periods marked by inflation. Businesses, particularly those in the e-commerce and financial sectors, have reported a worrying uptick in incidents related to first-party fraud, complicating the challenge of financial accountability and risk management.

The growing reliance on Buy Now, Pay Later (BNPL) services has also created more opportunities for fraudsters. These services, which allow consumers to purchase items and pay for them in installments, have been especially susceptible to manipulation through various fraudulent tactics.

Key Vulnerabilities Identified

Alongside first-party fraud, the report highlighted several other concerning trends in global fraud patterns. Account takeover (ATO) fraud, primarily fueled by phishing and smishing attacks, represented 27% of the total fraud incidents reported. Interestingly, traditional scams—including authorized push payment (APP) fraud—saw a decline, accounting for just 11% of reported cases this year compared to 16% in 2023.

Additionally, the report showed that 11% of password reset attempts were fraudulent attacks, with a staggering 27% for resets done via desktop computers. These statistics underscore the evolving risks that both individuals and organizations face in terms of cybersecurity.

A Shift in Fraud Patterns

As fraud prevention strategies develop, organizations must adapt to this new wave of criminal behavior. The data indicates that consumers have now emerged as the primary source of fraud, a significant paradigm shift in the identification and response to such threats. According to Stephen Topliss, Vice President of Fraud and Identity at LexisNexis Risk Solutions, the changing composition of fraud types challenges current detection strategies. Distinguishing first-party fraud from scams and account takeovers requires nuanced approaches.

Despite experiencing a surge in overall attacks in previous years, the latest report from 2024 shows a stabilization in global fraud rates. Notably, the human attack rate increased by just 1%, while there was a 15% drop in automated bot attacks. However, LexisNexis highlights the potential for a new wave of cyber assaults powered by artificial intelligence—an imminent risk that businesses must not overlook.

Regional Trends and Insights

The Cybercrime Report also examined the attack rates across different sectors and regions. The Financial Services sector reported an 18% increase in bot attacks, while the Communication, Mobile, and Media (CMM) sectors experienced a 15% hike in attack rates. Geographically, the EMEA region (Europe, the Middle East, and Africa) remains the least affected, with an attack rate of only 0.6% of transactions recorded, whereas North America saw rates at 2.2% and LATAM at 1.6%. Contrarily, the Asia-Pacific (APAC) region documented a 37% increase, raising the attack rate to 1.5%.

Looking Ahead: Future Implications

As businesses fortify their defenses against various threats in the cyber landscape, the report suggests organizations must remain vigilant. Cybercriminals are increasingly adopting advanced AI-driven tactics, marking a possible turning point where attacks could escalate dramatically. LexisNexis has noted that significant fraud incidents typically arise in waves, and current figures suggest the potential kickoff of another AI-enabled attack series on the horizon.

In conclusion, the findings of the Cybercrime Report illustrate a clear shift in the mechanisms of fraud, posing new challenges for companies striving to protect themselves and their customers. As this landscape evolves, organizations must streamline their security protocols to stay ahead of emerging threats, particularly those associated with first-party fraud.

For a detailed look, you can download LexisNexis’ full Cybercrime Report titled ‘The Calm Before the Storm?’ to understand these trends more profoundly.