Gen Z Most Willing to Commit First-Party Fraud,

SAN FRANCISCO, Dec. 14, 2023 (GLOBE NEWSWIRE) — Sift, the leader in Digital Trust & Safety, today released its Q4 2023 Digital Trust & Safety Index, which found a clear generational divide when it comes to committing first-party (or “friendly”) fraud*: younger consumers admit that they are the most likely to file a fraud dispute for a transaction they made even though they received the item and were satisfied with their purchase.

First-party fraud occurs when the legitimate cardholder is the one committing fraud, intentionally or not. First-party fraud disputes could be the result of an honest mistake, like a family member making a purchase without notifying the cardholder—or a consumer intentionally filing a chargeback in order to get their money back while keeping their purchase.

Despite the economy holding steady, many consumers still feel financial strain as prices and interest rates remain high. In times of financial stress, consumers are more likely to find creative ways to secure the best deals and get the most out of their money, including by participating in first-party fraud. This economic environment, coupled with the growing democratization of fraud, is leading to more consumers participating in the Fraud Economy and taking advantage of the dispute process and their consumer protections.

Findings from Sift’s independent survey of 1,016 U.S. across all age groups, revealed that 26% of consumers who admitted to filing a dispute despite receiving an item and being satisfied with the purchase said they did so because they wanted the money back and knew their credit card company would cover the cost. And when examined at a generational level, Sift survey results reveal likelihood of committing first-party fraud is inversely correlated with age. Forty-two percent of Gen Z surveyed admit to engaging in this type of fraud, compared to 22% of Millennials, 10% of Gen X, and just five percent of Baby Boomers.

“Younger generations have emphatically reported high levels of economic anxiety so it’s not surprising to see them look for ways to save even if that means dipping their toes into the waters of friendly fraud,” Kevin Lee, Vice President of Trust and Safety at Sift. “Combined with the broader democratization of fraud tools and methods, businesses are simply facing a greater number of potential threats to revenue and merchandise. This trend should be a call to action for merchants to implement a proactive fraud strategy and end-to-end dispute management process in order to preserve and grow profitability.”

Beyond this trend, the Q4 Digital Trust & Safety Index examines dispute rates and chargeback trends at-large, and shows that across the Sift network, dispute rates rose a moderate 6% YoY in Q1 2023 vs. Q1 2022—the three months following the holiday spending rush known as chargeback season. Several key verticals, however, saw massive jumps in chargeback rates, including in the ticketing industry, which saw a staggering 622% increase in dispute rates. Reselling is pervasive in this industry, with both consumers and fraudsters trying to make a profit off highly sought after tickets in short supply.

Average dispute amounts are also on the rise in select verticals. The average chargeback value in Q1 2023 was $388.70, up slightly from $384.60 in Q1 2022 across the Sift network. However, some industries saw much more dramatic increases. Transportation, for example, experienced a significant 367% spike in chargeback values YoY in Q1 2023. This could largely be attributed to the surge in travel post-pandemic and rising airline prices, coupled with rampant delays and cancellations due to weather during the holidays last year leading to more expensive disputes.

To read Sift’s Q4 Digital Trust & Safety Index, please click here.

About Sift
Sift is the leader in Digital Trust & Safety, empowering digital disruptors to Fortune 500 companies to unlock new revenue without risk. Sift dynamically prevents fraud and abuse through industry-leading technology and expertise, an unrivaled global data network of one trillion (1T) events per year, and a commitment to long-term customer partnerships. Global brands such as DoorDash, Yelp, and Poshmark rely on Sift to gain a competitive advantage in their markets. Visit us at sift.com, and follow us on LinkedIn.

Media Contact:
Victor White
Senior Director of Corporate Communications, Sift
press@sift.com