First-party fraud, also known as friendly fraud or transaction confusion, occurs when legitimate purchases are disputed and turned into chargebacks. It has become a growing issue, with 42 percent of Gen Z consumers admitting to engaging in such behavior and 50 percent of consumers reviewing past transactions. Financial institutions report a 50 percent increase in first-party fraud, which now accounts for 43 percent of issuer chargebacks and contributes to significant losses for merchants, representing up to 75 percent of fraud-related costs in digital businesses. This trend highlights the need for better awareness, transaction clarity, and stronger dispute management to reduce financial impact.

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