America’s Naughty List

Socure Risk Insights Report

How consumers bend the rules during holiday shopping

Table of Contents A time for joy, generosity, and...fraud? 
 Key findings

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4

Data and analysis

Quantifying first-party fraud losses

Results by industry

From economic woes to buyers revenge: The why behind first-party fraud

The private world of first-party fraud

Generational trends

The holiday effect: Understanding seasonal spikes in first-party fraud

2 6

7

7

8

8

9

9

‘Tis the season for first-party fraud — and the season to fight it3 10

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3

Imagine a shopper ordering the perfect gift, receiving it, and then claiming it never arrived. The retailer offers a refund or replacement, with few to no questions asked.

But what might seem like an isolated incident is actually part of a much larger trend: first-party fraud.

Sometimes referred to as “friendly fraud,”

The holiday season, with its surge in consumer spending, gift-giving pressures, and lenient return policies creates the ideal conditions for this type of fraud to thrive.

first-party fraud involves individuals exploiting systems — such as return and refund policies — for financial gain.

A time for joy, generosity, and...

fraud?

2

The financial toll of first-party fraud on businesses is staggering. According to a recent report from Appriss Retail and Deloitte, losses from fraudulent and abusive returns and claims topped $103 billion in 2024.1

Beyond these direct losses, the operational burden is just as significant.

Resolving disputes often requires extensive manual reviews.The expense and lengthy time-to-resolution, multiplied across millions of transactions, can further strain organizations already grappling with the heightened activity of the holiday rush.

According to a study from Chargebacks911 and The Strawhacker Group,

in lost revenue and merchandise, chargeback fees, higher overhead costs, and damaged relationships with card networks.2

Adding to the complexity is the rise in legitimate package theft, known as “porch piracy.” According to Capital One Shopping, Americans lost $13.4 billion in 2024 to stolen packages nationwide, and fraudsters often exploit this trend, filing false claims to secure refunds or replacements.3

And the issue isn’t just financial: first-party fraud also erodes customer trust and strains operational efficiency — especially during peak shopping periods like Black Friday and Christmas.

These overlapping challenges highlight the urgency for businesses to act.

This report takes a closer look at the current scope of first-party fraud to uncover its drivers, risks, and seasonal patterns. By understanding these factors, businesses can navigate the unique challenges of the holiday rush and identify practical opportunities to refine fraud prevention strategies — without compromising customer relationships.

chargebacks cost retailers 3.75 times the actual transaction value

Defining first-party fraud:

First-party fraud involves individuals

exploiting systems — such as

return and refund policies — for

financial gain.

Methodology

Socure conducted this research

using an online survey prepared by

Method Research and distributed by

PureSpectrum among n=2,000

adult U.S. consumers (age 18+) who

have made a purchase in the last six

months. The sample was split

equally between genders, with a

spread of age groups, race groups,

and geographies. Data was

collected from December 6 to

December 13, 2024.

3

Key findings

Consumers justify committing fraud with economic hardship and perceived fairness

60% 90%

of offenders say financial struggles are the primary reason for their actions, including rising interest rates and inflation

of offenders cite financial pressures during the holidays

of Americans never considered engaging in first-party fraud

58%

of offenders rationalize their actions through perceived retailer leniency

57%

of offenders believe large companies can absorb the cost

46%

of consumers admit to committing first-party

fraud as a result

43%of consumers report experiencing purchase regret

82%

of Americans agree strict return policies make first- party fraud more justifiable

53%

Revenge fraud is real

of consumers are more

likely to dispute other

legitimate charges if a

business makes a

mistake on their bill

64%

Revenge f raud

is real

of consum ers are mo

re

likely to d ispute oth

er

legitimate charges i

f a

business m akes a

mistake o n their bil

l

64%

Revenge fraud is real

of consumers are more likely to dispute other legitimate charges if a business makes a mistake on their bill

64%

4

Generational and behavioral divides highlight the complexity of

first-party fraud

Gen Z Millenials Gen X Boomers

79% 74%

57% 40%

Disputed charges in 2024 Gen Z Millenials Gen X Boomers

40% 39%

19% 2%

First-party fraud committed during the 2024 holidays

cite ethical concerns as a deterrant

49%

of offenders view

their actions as

consumer advocacy

46%

Consumers dismiss first-party fraud

of Americans believe

first-party fraud causes no harm

39%

of first-party fraud offenders agree large retailers can afford to cover the cost of disputed legitimate charges

63%

1 in 6 offenses exceeds $500 1 in 4 first-party fraud offenders feel no regret

1 in 5 Americans believe there are no consequences for holiday fraud

The holidays make first-party fraud more tempting — and concealable

of all first-party fraud in 2024 was holiday-related

38%

of all Americans committing first-party fraud did so specifically over the holidays

13%

more likely to commit first-party fraud

during the holidays

Gift-giving pressures make consumers

27% High-income shoppers are twice as likely as low-income shoppers to engage in fraudulent behaviors during the holidays

High-income shoppers 25%

Low-income shoppers 11%

Nearly half of consumers believe companies are more lenient with disputed charges during the holidays

49% of offenders admitting to disputing legitimate transactions simply because they had gotten away with it before

of offenders concealed holiday first-party fraud from their partners

74%

say they acted out of purchase regret

60%

of holiday first-party fraud offenders cite economic pressures as their reason

90%

Fake “porch pirate” incidents are another seasonal trend, increasing over threefold during the holidays

25%

8%

holiday season non-holiday season

higher during holiday season

3.125x

5

← Returns/refunds

9:41

What can we help you with?

I would like to...

Request a refund

􀆉

Tell us more...

I never received the package

􀆉

Next

Get help with a purchase you have made.

Comparing the results of Socure’s 2024 first-party fraud survey to 2023 reveals consistency in first-party fraud trends, though financial impacts provide a clearer picture.

One in six (17%) of first-party fraud offenses in 2024 involved amounts over $500, and 59% of all incidents exceeded $100. While the percentage of Americans admitting to committing first-party fraud (34%) and knowing someone who has (39%) remained consistent year- over-year, the data highlights the sustained prevalence of economic and behavioral drivers.

Data and analysis

6

7

Quantifying first-party fraud losses

of offenses exceeded $500

17%

of offenses were under $100, often tied to offenders

testing company policies

41%

of offenses involved amounts over $100

59%

Results by industry

Banking and Credit

remains the most impacted industry

eCommerce

sees a significant portion of fraudulent refund claims and false package reports

Buy Now, Pay Later (BNPL) and Personal Loans

show notable misuse as well

9%

of disputed transactions 8-10%

of respondents admitting to fraudulent activity

11%

unpaid credit card bills

11%

of survey respondents admitting to these actions

Each of these fraudulent activities has been committed more than twice.

8

From economic woes to buyers revenge:

The why behind first-party fraud Behind every fraudulent transaction lies a complex web of financial pressures and psychological triggers that transform everyday consumers into fraud perpetrators.

of offenders cited financial hardship

(i.e. inflation, rising cost) as main driver

60%

of offenders committed first-party fraud because it’s easy to get away with

40%

Purchase regret played a significant role:

of offenders reported purchase regret

91%

took fraudulent action, such

as disputing legitimate charges

43%

The private world of first-party fraud While first-party fraud may seem like a victimless crime to perpetrators, its pattern of secrecy tells a different story — one of guilt, shame, and calculated concealment from those closest to them.

of offenders haven’t told anyone about their actions

31%

of offenders kept their fraud secret from their partners

47%

of offenders concealed their fraud during the holidays, showing heightened embarrassment during seasonal activities

74%

9

Generational trends A generational fault line has emerged in first-party fraud, with younger consumers not only more likely to commit fraud, but also more willing to justify it.

Disputed payment charges in 2024

Gen Z

79%

Gen X

57%

Millennial

74%

Boomer

40%

First-party fraud committed in 2024

Gen Z 40%

Millennial 39%

Gen X 19%

Boomers 2%

of Americans cite ethical concerns as a deterrent49%

with Gen X and Boomers more likely to cite this as a primary reason for avoiding first-party fraud

The holiday effect: Understanding seasonal spikes in

first-party fraud Holiday shopping pressures can intensify the appeal of first-party fraud, transforming seasonal financial stress into calculated consumer behavior.

cited financial reasons, including inflation, personal financial struggles, and credit card interest rates

90% “Porch pirate” claims tripled during holiday purchases

holiday season

non-holiday

season

25%

8%

higher during holiday season

3.125x

of respondents repeated first-party fraud because they succeeded in 2023

60% of holiday offenders

cited purchase regret

49%

10

‘Tis the season for first-party fraud — and the season to

fight it Our first-party fraud survey reveals a troubling reality: holiday shopping has become a prime time for fraud, driven by financial pressures, lenient policies, and normalized behaviors. Nearly 40% of Gen Z and 39% of Millennials admitted to engaging in first-party fraud over the holidays. Fraudulent "porch pirate" claims, chargebacks, and disputed transactions collectively cost businesses billions each year.

But fraud isn’t just a financial issue — it also erodes trust, strains customer relationships, and burdens operations. And with 49% of holiday first-party fraud offenders admitting they repeated it because they "got away with it" last year, it’s clear the cycle will continue without stronger deterrents.

The surge in consumer activity during the holiday season calls for a transformative approach to first-party fraud prevention. By harnessing AI-driven technologies and real- time data sharing, businesses can address the root causes of fraud — from purchase regret to financial hardship — while safeguarding their revenues. This sophisticated defense strategy, built on cross-industry collaboration and predictive insights, positions businesses to not only protect their operations during peak seasons but to build enduring customer relationships founded on mutual trust and transparency.

Socure's First-Party Fraud Consortium unifies organizations to take on this complex

challenge by pooling data and insights.

20B+ Transactions contributed

325M+ Accounts contributed

190M+ Identities contributed

121M+ Unique identities contributed

Socure's solution combines the

industry's largest cross-industry consortium data with advanced AI

analytics to stop repeat abusers and prevent financial losses at scale.

By delivering real-time risk signals and alerts across the entire customer journey,

Socure helps organizations protect their bottom line while maintaining seamless

experiences for legitimate customers.

Sigma First-Party

Fraud

13socure.com © Socure 2025, Inc. All rights reserved. REP_8131473523_02

Socure is the leading provider of digital identity verification and fraud prevention solutions, trusted by the largest enterprises and government agencies to build trust and mitigate risk. Leveraging AI and machine learning, Socure’s industry-leading platform achieves the highest accuracy, automation and capture rates in the industry. With the acquisition of Effectiv, Socure expands its capabilities to offer end-to-end identity fraud and payment risk management, integrating advanced transaction monitoring, credit underwriting and know-your-business (KYB) solutions into its platform.

Serving more than 2,700 customers across financial services, government, gaming, healthcare, telecom, and e-commerce, Socure’s customer base includes 18 of the top 20 banks, the largest HR payroll providers, the largest sportsbook operators, 27 state agencies, four federal agencies, and more than 500 fintechs. Leading organizations including Capital One, Citi, Chime, SoFi, Green Dot, Robinhood, Dave, Gusto, Poshmark, DraftKings, PrizePicks, the State of California and many more trust Socure to deliver certainty in identity across onboarding, authentication, payments, account changes, and regulatory compliance. Learn more at www.socure.com.

Citation

Appriss Retail. (2024). 2024 consumer returns report. Eaton, M. (2023). The flywheel effect of chargebacks cost US merchants USD 243B in 2023. The Paypers. Capital One Shopping. (2023). Package theft statistics.

Learn more →

See how Socure can help solve for

first-party fraud.

https://info.apprissretail.com/hubfs/Resource-Center/2024-041-2024-consumer-returns-report.pdf https://thepaypers.com/thought-leader-insights/the-flywheel-effect-of-chargebacks-cost-us-merchants-usd-243b-in-2023--1266727 https://capitaloneshopping.com/research/package-theft-statistics/ https://www.socure.com/products/sigma-first-party-fraud