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First-Party Delivery Fraud Becomes An Inflation Driver In USA

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Clear Facts

  • First-party delivery fraud costs U.S. merchants and financial institutions over $100 billion a year.
  • 35% of surveyed Americans between the ages of 18 to 77 admit to committing first-party delivery fraud, according to Socure.
  • Gen Z consumers are most likely to commit first-party delivery fraud, with 52% saying they’d do it if there were no negative consequences.

First-party delivery fraud is becoming another driver for inflationary pressures in the United States, as businesses offset losses with higher prices. According to a recent survey by digital identity verification firm Socure, this type of fraud costs U.S. merchants and financial institutions over $100 billion a year.

First-party delivery fraud occurs when someone uses their identity to commit a dishonest act for financial gain. Socure’s survey found that 35% of the 1,000 Americans between the ages of 18 to 77 admitted to engaging in this type of fraud.

“Think of it as buying and lying,” said Yigit Yildirim, senior VP and general manager of fraud and risk products at Socure, in an interview with FOX Business.

“Examples include falsely claiming that a delivery for an online order has been lost to get a refund, choosing to indefinitely not pay off a credit card bill, making a Buy Now, Pay Later purchase with no intention of paying it off or disputing legitimate financial transactions.”

Socure’s survey also revealed that Gen Z consumers are most likely to commit first-party delivery fraud, with 52% saying they would do it if they knew there would be no negative consequences. Additionally, 20% of Gen Z consumers, a rate three times higher than Baby Boomers, say they don’t consider the act to be ethically wrong.

“First-party fraudsters target financial institutions and merchants, the businesses that they bank with, borrow or buy from,” Yildrim said. “Large national banks, community banks, credit unions, lenders, fintechs and crypto have all been impacted.”

Amazon prohibits third-party sellers from sending unsolicited packages to customers. The company asks consumers to report any packages they did not order and that are not gifts.

“When fraudsters get away with theft, consumers ultimately pay the price through higher costs and additional fees,” Yildrim added. “We’re all stuck footing the bill.”

Data compiled by FICO shows that first-party fraud typically makes up roughly 10% of credit volume losses, or bad debt, and more than 20% of the value.

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“As more consumers move online, we’ll start to see a shift away from in-person theft at brick-and-mortar locations to online scams like first-party fraud,” Yildrim said.

“Old-fashioned shoplifting won’t go extinct, but unless something is done to thwart the issue, more people will begin to realize how easy it is to carry out these scams from the safety of their own homes.”

Yildrim also pointed out that outdated regulatory policies and a lack of data sharing make it far too easy for these fraudsters to continue cheating the system.

Clear Thoughts

The alarming rise in first-party delivery fraud, costing over $100 billion a year, is yet another factor driving inflation in the US. With 35% of Americans admitting to engaging in this dishonest behavior, it’s clear we have a moral crisis on our hands. Gen Z consumers, alarmingly, are the most likely to commit this fraud, with many not even considering it unethical.

It’s time for businesses and financial institutions to take a stand against this deceitful practice. Outdated regulations and lack of data sharing are emboldening these fraudsters, and unless we address the issue head-on, we’ll all continue to pay the price.

Let us know what you think, please share your thoughts in the comments below.

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7 Comments

7 Comments

  1. david brown

    November 19, 2023 at 9:59 am

    THe package delivery services should make them file a police report. And report items that are serial numbered to the places that register them. Especially cell phones, keep Apple from letting them register them, making them useless.

  2. John Storm

    November 22, 2023 at 6:51 pm

    America is raising a generation of thieves and fraudsters who have no conscience about perpetrating illegal activity. And “Why Not?” when these reprobates continue to see on the news there are zero consequences for those who loot and shoplift from high-end stores in major cities. Our country has hit a new low. And it was predictable when we see how America changed after the George Floyd fiasco and how COVID permanently altered our national psyche. And God-forbid if America gets into a REAL shooting war with China or Iran anytime soon because these Gen-Xer’s will never allow themselves to be on scripted to defend our homeland. They are weak of mind, spirit and body.

  3. Craig

    November 22, 2023 at 8:02 pm

    I’ve had my credit card hacked in the mid-east ($9,000), the Sychell (spelling?) Islands (more than $1), and the internet where I’ve been charged for things I knew nothing about. If you research on the internet you’ll find many complaints about false charges that the companies involved are making. This is probably due to companies I’ve done business with sharing my card number — but I don’t know who does it. Bank of America has been good about canceling the false charges and now I have a new card/number every year.
    I don’t cancel legitimate charges.
    A database of users would be a good idea. Abusers would accumulate a record of un-verifiable complaints that sellers can use to avoid these people. Also, when delivery people photograph their deliveries, it makes fraud less likely. And, digital photographs are inexpensive.

    • Lseyfert

      November 22, 2023 at 9:30 pm

      Insurance companies compile lists they shareware each other about people who make repeat claims against their own ins carriers & against other insurers for fake auto injuries as well as fake workman’s comp claims. Why don’t these businesses compile similar lists of repeat delivery fraud & share amongst each other too.

  4. Rodnut

    November 23, 2023 at 12:13 am

    Just shows these Gen Z Brats have lost most of their and will not get them back.

  5. BRUCE YODER

    November 24, 2023 at 8:28 pm

    This speaks volumes about personal character. If you are willing to lie, cheat, and steal when purchasing something, how should a business trust you as an employee? Better yet, how should a customer be willing to do business with you? This is beyond sad! The majority of Gen Z folks think it is okay to lie, cheat, and steal. It looks like anything is okay as long as you don’t get caught! I wonder what they would think if someone stole something from them. Beyond sad and pathetic!

  6. Tim Kuehl

    December 2, 2023 at 6:54 pm

    Ah, the age of irresponsibility blossoms. At it is the height of their selfishness to say they would do it if they knew there would be no negative consequences. The only negative consequences they’re worried about are those apply to them, not to the others who have to somehow make up for the financial loss these parasites cause.

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