Second-party fraud

In second-party fraud, the victim is involved—intentionally or unintentionally. For example, someone might give their account to a friend who then conducts fraudulent activity. In third-party fraud, the perpetrator steals someone’s identity without their knowledge to commit fraud.

Examples include parents allowing children to open accounts with false information, individuals renting out their verified bank accounts (a practice known as “money muling”), or account holders letting fraudsters use their digital wallets in exchange for a fee. This type of fraud often blurs the line between victim and accomplice.

Second-party fraud is hard to detect because it uses real identities and verified accounts. Businesses may struggle to prove intent, making enforcement or legal action difficult. Traditional fraud detection systems may not flag these activities until significant damage has occurred, especially if the primary account holder continues to deny wrongdoing. ---