Boston, October 15, 2012 – A new report from Aite Group details the manifestations of first-party fraud, examines the impact of first-party fraud on financial institutions, and discusses various solutions to this challenging problem. This report is based on an Aite Group survey of bank fraud executives at Early Warning Service’s Q2 2012 summit and on phone interviews with bank fraud executives in the United States, United Kingdom, and Israel. In total, 35 financial institution fraud executives participated in this research.
Loosely defined as incidents resulting from the actions of individuals who enter a financial relationship with the intent to defraud, first-party fraud encompasses a variety of behaviors, including true identity fraud, synthetic identity fraud, and identity manipulation. First-party fraud in financial services is a significant issue that extends across products—from credit cards to deposit accounts to loans—and is remarkably difficult to identify, quantify, and prevent. This pernicious form of fraud is responsible for US$18.5 billion in 2012 credit card losses for financial institutions around the globe, a number that will grow to US$28.6 billion by 2016.
“The impact of first-party fraud will only increase as the arrival of EMV dries up the rich source of illicit funds that constitutes the U.S. counterfeit card market,” says Julie Conroy, research director with Aite Group and author of this report. “It is imperative that financial institutions invest the time and resources necessary to understand the scope of this problem and deploy requisite fraud prevention tools to address the issue.”
First-party fraud solution vendors profiled in this report are Detica, Early Warning Services, Equifax, Experian, FICO, FIS, ID Analytics, NICE Actimize, SAS, and Visa.
This 24-page Impact Note contains seven figures and five tables. Clients of Aite Group’s Fraud & AML service can download the report.