Fraud brings to mind shadowy figures hacking bank accounts. But some of the most common types happen much closer to home, often involving ordinary people making choices they don't realise are against the law.

Research by Cifas (opens external site), the fraud prevention service, found that nearly half of participants believed first-party fraud is "reasonable" in certain circumstances.

What first-party fraud is#

Knowingly providing false or misleading information to gain a financial advantage — being accepted for a loan, or getting better rates.

Unlike third-party fraud, where an unsuspecting victim's identity or details are stolen, first-party fraud is committed by the legitimate account holder or applicant themselves.

Examples:

  • Overstating your case on an application. Inflating what you earn, or leaving existing borrowing off the form, to get a loan or card approved.
  • "Fronting" a motor policy. Putting the low-risk driver down as the main one when someone else does most of the driving, to bring the car insurance premium down.
  • Inflating or inventing a claim. Adding damage that didn't happen, or claiming for an incident that never took place.
  • "Friendly fraud" on card payments. Telling your bank a legitimate purchase never arrived, or wasn't what was described, so the payment gets reversed.

These might look like harmless workarounds. They're all forms of fraud, and they carry consequences.

The grey area of perception#

The Cifas research highlights a real gap between perception and reality.

36% of participants said they don't think asset conversion fraud — selling something bought on finance before paying it off — is illegal. 19% believe mobile phone insurance fraud — claiming for a device that was never lost or stolen — is acceptable.

Cifas suggests first-party fraud is often wrongly seen as a victimless crime. Even without a direct, visible victim, the effects are widespread.

The most common types, according to the research:

  • 19% admitted falsely claiming a package hadn't arrived to get a refund
  • 18% admitted lying about qualifications on a CV
  • 16% admitted deliberately continuing to claim Single Person Discount to reduce a Council Tax bill after permanently moving in with a partner

How it could affect you#

  • Legal action. First-party fraud is illegal. You could face fines, prosecution, and even a criminal record depending on severity.
  • Financial loss. You may be asked to repay money obtained fraudulently, and could lose access to certain financial products or services.
  • Higher costs for everyone. When fraud is committed, businesses raise prices or tighten lending criteria to cover losses — which affects honest customers too.

Avoiding it by accident#

First-party fraud isn't always intentional. Financial terms and conditions are confusing, and misunderstandings happen.

  • Be honest and accurate. When filling out applications for credit, loans or insurance, always give truthful information.
  • Read the fine print. Make sure you understand the terms of anything you sign.
  • Ask if you're not sure. Reach out to the lender for clarification. Better to ask upfront than assume and risk it.

First-party fraud is far from a white lie or a way to beat the system. Understanding what counts, and staying transparent, is how you stay on the right side of the law.

The key things to remember#

  • It's committed by the legitimate applicant, not an impersonator.
  • Nearly half of surveyed people thought it reasonable in some circumstances.
  • Common examples include fronting, false claims and friendly fraud.
  • 36% didn't realise asset conversion fraud is illegal.
  • The most admitted behaviour was falsely claiming a package hadn't arrived, at 19%.
  • Consequences include fines, prosecution and a criminal record.
  • It isn't victimless — losses get passed on through prices and lending criteria.