Second-party fraud

Fraud committed by someone the cardholder actually knows and gave access to, not a stranger and not the cardholder themselves.

For example, a relative might use a parent's card without full permission, or a friend might help the cardholder file a false claim.

Misuse of payment or account credentials by a person connected to the legitimate holder, either using shared details without full permission (a family member's card) or acting on the cardholder's behalf as a willing accomplice.

Second-party fraud usually takes one of two forms:

• Misuse without full permission, where someone with access to the card or account, such as a family member or roommate, spends beyond what the holder agreed to.
• Collusion, where the cardholder knowingly lets another person use their credentials, or sells them, and may later dispute the charges.

The pattern is hard to place because it sits between two familiar categories:

1. First-party fraud is the account holder acting alone.
2. Third-party fraud is a total stranger using someone's identity.
3. Second-party fraud involves a person with a real connection to the holder.

Second-party fraud sits next to terms that are easy to mix up:

• First-party fraud is committed by the genuine account holder.
• Third-party fraud is committed by a stranger who has stolen an identity.
• Friendly fraud is a genuine cardholder disputing a purchase, which can overlap when a family member made it.