First party fraud management: framework for the retail industry

Abstract

Purpose First party fraud in which consumers commit fraud against retailers is a growing problem. Research in this area is very limited which means that there is almost no guidance available to mitigate this problem. Existing fraud management frameworks focus on the management of other fraud, such as identity theft or employee instigated fraud. Due to the different nature of these frauds, these frameworks do not adequately address first party fraud. Therefore, the purpose of this paper is to propose an adapted version of the fraud management lifecycle framework which is specific to first party fraud management. Design/methodology/approach The authors conducted a systematic literature review and compared/contrasted a number of existing fraud management frameworks in related domains to see which one would be most suitable for first party fraud management. Findings The authors found Wilhelm’s fraud management framework the most promising for adaptation and application to the first party fraud context. By modifying an existing framework according to the contextual requirements, the authors make the framework much more relevant to first party fraud management. Practical implications The framework could help retail managers better understand and manage this growing business problem and open new streams for further research. Originality/value This research also makes an important contribution by proposing a framework and by helping bridge a glaring and problematic gap in existing literature and opening up new streams of research.

Does psychological distance and religiosity influence fraudulent customer behaviour?

“…There has been a drastic change in customer and retailer behaviour with e‐commerce. The opportunities for customers to engage in fraudulent behaviour towards online sellers and the ease of committing such acts have increased (Amasiatu & Shah, 2018; King & Dennis, 2006). Studies show that e‐commerce transactions are riskier for both parties than traditional transactions (Bodur et al., 2015), and without the presence of a physical store, this risk is further increased (Darke et al., 2016).…”

A framework for ID fraud prevention policies in E-tailing sector

“…Therefore, personal identification procedures and policies in these sectors are definite and online services are precedent to personal and physical identification of their customers. In contrast, e-tail sector investments have very limited supporting arrangements and there is a lack of physical identity verification and an absence of policies to collect any evidence to prove customer identity (Amasiatu and Shah, 2018). Similarly, other private sectors may have less competition, availability of sufficient funds and more opportunities for business in comparison to e-tailers, who operate in tough competition with limited resources.…”

The management of first party fraud in e-tailing: a qualitative study

“…Despite the prevalence of this behaviour, extant literature suggests that retailers do not appropriately deal with this fraud committed by their own customers for various reasons such as poor understanding of first party fraud, fear of negative impact on customer experience, etc. (Amasiatu and Shah, 2018;Fullerton and Punj, 2004;King et al, 2007).…”

“…Researchers such as Amasiatu and Shah (2018), Durbin (2007) and Wilhelm (2004) suggest that adopting a holistic approach to fraud management can lead to superior fraud loss performance. These recommendations necessitated the need for a holistic fraud management framework to guide the data collection process.…”

“…Despite the prevalence of this behaviour, extant literature suggests that retailers do not appropriately deal with this fraud committed by their own customers for various reasons such as poor understanding of first-party fraud, fear of negative impact on customer experience, etc. (Amasiatu and Shah, 2018; Fullerton and Punj, 2004; King et al , 2007). Furthermore, tackling business crime is not always high priority for law enforcement agencies and the general public have a more positive attitude towards this fraud compared to other frauds (Wilkes, 1978; Dodge et al , 1996; Doig and Levi, 2013), which means that there is very little deterrent effect for potential offenders and reoffenders.…”