Anonybit | Decentralized Biometric Identity Management Platform

Imagine receiving a notice from your insurance company denying your claim because they believe you are committing fraud. Unfortunately, this scenario is increasingly common for businesses today. Just as first-party fraud can impact individuals, it can also affect businesses. First-party fraud can cost companies thousands of dollars, creating operational headaches, damaging reputations, and harming customer relationships. Understanding this type of fraud and its differences with third-party fraud can help businesses mitigate risk and protect themselves from financial losses and operational challenges. In this blog, you will learn the differences between first-party fraud and third-party fraud and their impacts on businesses.

Anonybit’s first-party fraud prevention solution can help businesses detect and respond to first-party fraud effectively, enabling organizations to reduce the financial and operational impacts of these types of fraud.

What Is First-Party Fraud?

First-party fraud occurs when an individual or an organization purposely misrepresents their identity or provides incorrect information to gain an unfair or unlawful advantage. This may involve using a synthetic identity. The use of false or synthetic identifying information distinguishes it from third-party fraud, in which fraudsters use a stolen identity to carry out illegal activity, or second-party fraud, where the fraudster uses someone else’s identity with that person’s knowledge.

Organized Deception

First-party fraud is a significant issue across all kinds of financial services. . Individuals will conduct a transaction and may regret it, or they may send money to a friend and then claim it wasn’t them for a refund. In another example, a customer may order a product online and then claim it has yet to be delivered, asking for a full refund. Some customers will buy an item to use it before returning it for a refund, in a process that is sometimes known as de-shopping.First-party fraud may be either opportunistic—carried out by an individual—or organized, perpetrated on a larger scale by a fraud ring. 

Organized fraud, in particular, can lead to significant losses because criminal rings can defraud organizations out of large sums of money and because they employ professional tactics to fly under the radar and evade detection.

What Is Third-Party Fraud?

Third-party fraud, generally known as identity theft, is where an individual’s identity or personal details are used without their consent or knowledge to gain credit or products. It also includes manufactured identities, with the fraudster creating a new identity using stolen and false information. Third-party fraud has an apparent victim, making them easier to spot if the right methods are employed. 

Third-Party Fraud Types

Third-party fraud  involves using a person’s identity or personal details without their consent or knowledge to gain credit or products. It also includes manufactured or synthetic identities, with the fraudster creating a new identity using stolen and false information. Fraud varies significantly across lenders’ portfolios and product types, as well as across:

• Age
• Gender
• Geography
• Demographics 

The Fraud Index Report by Experian shows that third-party fraud is a growing risk across the board.

First-Party Fraud Risks

In general, mortgages and asset finance are much more at risk of first-party fraud, but as the latest Zelle fraud trends show, first-party fraud is expanding into new channels. The fraud problem is complex. With a partner like Anonybit, you can easily use biometrics to confirm and verify consumer identity before processing transactions. This ensures that people are who they claim to be at a time of a transaction, but also has the added benefit of creating an irrefutable audit trail that will be hard to deny later on. 

Anonybit Solution 

At Anonybit, we help companies prevent data breaches and account takeover fraud with our decentralized biometrics system design. With a decentralized biometrics solution, companies can enable passwordless login, wire verification, step-up authentication, and help desk authentication. We are on a mission to protect companies from data breaches, account takeover and synthetic identity fraud.

To achieve this goal, we offer security solutions that cover the user lifecycle such as:

• 1:N deduplication, synthetic and blocklist checks upon account origination
• Passwordless login
• Step up authentication
• Account recovery
• Secure storage of biometrics and other PII data 

Anonybit eliminates the tradeoffs between privacy and security. Prevent data breaches, enable strong authentication for eliminating account takeovers, and enhance the user experience across the enterprise using Anonybit.