What is 3rd Party Fraud?

Fraud done against a bank or a merchant by someone who is not associated with either side is third-party fraud.

In spite of the wide variety of fraud schemes, three broad categories may be identified. Third-party fraud is an all too typical occurrence. Victims may experience it seemingly out of nowhere, and it can have a significant financial impact.


What is commonly known as "1st Party Fraud" occurs when a business's own consumers execute fraudulent acts against the business.

Allowing another individual to use one's identity or personal information in order to commit fraud is an example of second party fraud, often known as money mules. Since the identification of the individual used to commit the fraud has often been permitted to stand, businesses may find it challenging to detect and contest second party fraud.

There are many different kinds of "3rd party fraud," which generally refers to fraud perpetrated against a bank or retailer by someone who is not directly involved in the transaction.

Instances of Third-Party Fraud That Usually Occur

The fraudulent use of a victim's account information is known as account takeover (ATO) fraud. The offender can then use this information to steal sensitive data, such the customer's PIN. This gives them the ability to make unlawful withdrawals and modify account information like addresses and passwords. One or more of the victim's accounts may be compromised by ATO. These can be for financial services, investments, communications, utilities, transportation, lodging, and retail or leisure purchases made online. The taking over of a person's financial accounts typically involves the taking of their money. Direct debit, payments, and transfers are all viable methods for accomplishing this without the victim's awareness or agreement.

Making up an alias, or synthetic identity, is a well-known kind of identity theft. In this context, the term "Synthetic Identity Creation" (SIC) is used interchangeably. As a result, it reveals how identity thieves steal legitimate personal information to commit fraud. No genuine person is involved when a new identity is created using fraudulent and manufactured information. This procedure is the source of a lot of fraud.

To conduct fraud by using a false identity is known as "false identity fraud." Creating a credit card, applying for a loan, or opening a bank account are all examples of identity fraud.

Any fraudulent use of a credit card as a payment method is referred to as "credit card fraud." Credit card fraud, also known as chargeback fraud or friendly fraud, can occur when a legal customer makes a purchase but then doesn't pay for the goods or services they've received.

Credit card new application fraud occurs when a criminal applies for a credit card in another person's name with the intent to make unauthorized purchases.

What Does This Topic Have to Do With Being a Notary?

As a notary public, we may come across customers that need a name affidavit notarized and other affidavits that require a sworn oath or affirmation due to an issue they are dealing with because of fraud or forgery. Identity theft is one of the top crimes on the list of people being victimized. Understanding the things that may help the general public protect themselves better is why these posts are created and shared to help with awareness. You a notary public can use this content and share with others that may not be aware that this is "a thing" and they will appreciate you for sharing it. Share it on your social media, websites, and a blog if you have one. Just use your own words when we you do. 

Take the opportunity to allow me to get to know you more as well as you having some of your questions answered by me with a scheduled video conference or phone call. Building relationships is where it's at. Continue to "Always be learning" and take advantage of a few of my in-person and online live trainings as well as joining the "Be About Your Notary Business" membership that will give you access to many of the replays and pre-recorded trainings to help your business grow once you apply the proven methods that has helped me and others I've taught along the way. Learn more through, www.ncNotarySigningServices.com/trainings.html.


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