Second-party fraud

Second-party fraud refers to instances where an individual gives their credentials, identity information, or other sensitive data to another person so that the second person can engage in fraud. It is essentially permission to engage in “light identity theft.” This is often done in exchange for payment; other times it stems from a desire to help a friend or family member in financial need.

Frequently asked questions

What is the difference between second-party and third-party fraud?

In second-party fraud, both individuals are active participants in the fraud. By giving the bad actor access to personal information, the provider enables that fraud. In third-party fraud, there is no consent: Sensitive personal information is stolen and used to commit fraud without the victim’s knowledge.

What are some examples of second-party fraud?

Some examples of second-party fraud include:

  • Money muling, in which a bad actor opens a bank account under the other person’s name in order to engage in money laundering.
  • Credit fraud, in which a bad actor uses the other person’s information to apply for a credit card or line of credit. 
  • Chargeback fraud, in which a bad actor uses the other person’s credit card to purchase goods or services. The credit card owner then claims it was fraudulent activity, resulting in a refund or chargeback. 
  • Health insurance fraud, in which a bad actor uses the other person’s health insurance information to get medical care or prescriptions.

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