Economic Pressures Lead to Rise in First-Party Fraud During Holiday Season

Rise in First-Party Fraud During 2024 Holiday Season

Recent research by Socure reveals a startling trend: one in eight Americans, or 13%, committed first-party fraud over the 2024 holiday shopping season. This type of fraud, often called "friendly fraud," involves consumers taking advantage of return and refund policies for personal financial benefit. The scale of this issue is alarming, as it results in more than $100 billion in annual losses for businesses primarily due to chargebacks and promotional abuses.

The Economic Context

Heightened consumer spending combined with the pressure of gift-giving created a perfect storm last November and December. As a result, 27% of Americans admitted to being more likely to engage in first-party fraud when purchasing holiday gifts. The driving force behind this behavior was clear: nearly 90% of the offenders cited financial difficulties, such as inflation and high credit card interest rates, as their motivation.

Gen Z consumers emerged as the largest group of offenders, with 40% acknowledging their involvement in fraudulent activities. This demographic is particularly concerning for retailers and financial institutions due to their rising financial power and significant influence online. Surprisingly, individuals with higher household incomes—those earning over $100,000—were twice as likely to commit first-party fraud compared to individuals with lower incomes, with fraud rates of 25% versus 11%.

Additionally, fraudulent claims of