Cybersecurity Europe Insights

First-Party Fraud Growing Threat: Visa Reveals Over 9 in 10 Businesses Are Impacted

The number of individuals committing first-party fraud, fraud in which a person knowingly presents false information about who they are, is rising. So much so, that research from Visa, the payment giant, has revealed that 93 per cent of businesses have experienced this type of fraud over the past year.

First-party fraud can appear in a variety of different ways. In the financial sphere, it can look like someone applying for a loan, knowing they won’t pay it back or filing a false chargeback claim. However, it is not limited to the financial industry. Examples of first-party fraud include:

  • A gym-goer forgetting to cancel their membership.
  • A customer claiming that an order never arrived or arrived damaged.
  • Someone blaming their child for making a purchase on their parent’s device.

In its report, Visa shows that up to 20 per cent of card charge disputes experienced by businesses could be first-party fraud. Commenting on this, Mandy Lamb, managing director of Visa UK and Ireland says: “Small businesses are the beating heart of both the UK economy and our local communities.

“We recognise their vital importance and that’s why we are constantly evolving our protective solutions. These new measures will help to ensure small businesses can conduct business safely and securely whilst maintaining the high level of customer protection through Visa’s Zero Liability Policy.”

“Fraud, in all guises, is a persistent threat that undermines trust in our financial systems, impacting businesses, individuals and livelihoods. Everyone loses with fraud, which is why it’s everyone’s responsibility to tackle the problem head on, and why we’re doing all we can to support businesses impacted by the problem.”

Visa Compelling Evidence 3.0

Visa Compelling Evidence 3.0 (CE3.0) is Visa’s new framework that was made to give businesses more security when dealing with disputed customer charges. It ensures that the complaint is valid and authorised by the cardholder. In turn, this provides merchants with an additional level of protection, all the while, ensuring consumers making genuine claims are able to do so in peace.

CE3.0 now allows businesses to provide records of two previous undisputed transactions using the same payment method. These transactions must be between 120 days and 365 days old as of the dispute date and either the IP address or the device ID/fingerprint must match across all three transactions. This is in addition to either an element of IP address, device ID/fingerprint, shipping address or account log in ID.

Using this evidence businesses can assess the validity of the disputed charge. Consequently, they could keep their money from the original transaction.

The continued fight against fraud

These changes are an important part of Visa’s strategy to fight all types of fraud across its network and protect businesses. Meanwhile, 78 per cent of respondents said that they knew where to access advice and support when combatting first-party fraud. The most popular places to go for advice were

  • Bank (57 per cent)
  • Credit card provider (50 per cent)
  • Consumer organisations such as Citizens Advice (48 per cent)

In some instances of a disputed charge, the seller won’t refund the customer. Though justified in some instances, in others where a customer has had their credentials used to make an unauthorised or fraudulent payment, Visa’s Zero Liability Policy could see them get a refund.

The impact of first-party fraud

Violeta Stevens is the managing director of Union Hand Roasted Coffee based in London. Explaining how first-party fraud has impacted her business, she said: “It’s not just the financial impact that takes its toll, there is a lot of unseen time and admin on the side of the business that goes into these disputes/claims.

“We’ve seen customers claiming that products are damaged, which means we have to spend the time checking through our systems and sending a replacement, with no evidence that the products are definitely damaged. Likewise, we also have experienced people claiming that they simply haven’t received any coffee, when we know the coffee has been sent straight away after their order.”

Gordon Errington is the founder and managing director of Action Replay Sports, as well as the owner of overseas holiday properties.

Gordon has experienced problems with first-party fraud at both of his businesses, despite how different they are. He said: “As a business owner, I’ve experienced the problem from two different sides. With my sports retail business, unless we are willing to pay extra for all the proof of postage options, we end up in a situation where people are saying they didn’t receive goods. This is obviously hard for us and has an impact.

“For my buy-to-let properties overseas, the problem people have is they overspend when they’re away, return home, look at the size of their bill and decide they can’t afford it. This is when they start to try and claim part of it back. They don’t say anything while they’re there and are quite happy with everything, it’s only when they return home that there’s an issue. They’re not always looking for the full amount, but there are people out there who do it.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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