What is first party fraud? And how does this affect me Is the question most people will ask when they see this article and are hence compelled to read it. Basically first party fraud is fraud committed by an individual or group of individuals on their own account. This fraud is perpetrated solely for their own benefit and gain.
First party fraud is on the rise and how it affects you
What is first party fraud? And how does this affect me Is the question most people will ask when they see this article and are hence compelled to read it.
Basically first party fraud is fraud committed by an individual or group of individuals on their own account. This fraud is perpetrated solely for their own benefit and gain,
These could be business customers of a financial institution or personal costumers, this fraud could be in the form of obtaining goods, services or money by deception as there was never any intention to pay for the said commodity.
Sometimes these frauds are opportunistic and are perpetrated when the customer falls on hard times, but they can also be complex well planned and organized frauds, sometimes taking months or even years to achieve the final objectives and goals.
In such circumstances the process would involve things such as lying to creditors on application forms, the use of false or proxy addresses, and sometimes include the use of false identification.
This might be a passport, Identity card or driver’s license.
The aim is always to extract money, goods or services from the provider.
A very popular way used is misuse of the check book facility, by depositing worthless checks or counterfeit checks to their own bank account or passing them on to another unsuspecting person to clear for them.
The use of checks cashing services to cash dud checks
Depositing of empty envelopes through an automated teller machine
The abuse of a line of credit or an overdraft facility
Kiting is when a customer of an institution deliberately moves funds between two or more accounts at the same or different branches or financial institutions to disguise a lack of funds.
A bust out is a fraud committed when a customer of an organization such as a financial institution t who has previously been a good customer for a period of time, and has an unblemished record with the organization uses their good behaviour to gain access to a large amount of money, goods or services which they then use with no intention of repaying it.
Bust outs are frequently committed when a person is leaving a country this is true and more prevalent in countries with high levels of transient people, which can be students or short term workers or a business is trying desperately to hold on to a failing business venture
To combat this type of fraud and reduce future risk the financial institutions such as banks and credit card companies are reducing credit card and overdraft limits and overall credit available to other customers
Published in: Personal Finance