First-party fraud occurs when a cardholder makes a legitimate purchase, receives the goods or services, and then claims it was fraud. This could be done out of confusion – they simply do not recognize the charge – or to defraud the merchant, taking advantage of the chargeback process to get a good or a service for free. 

Mastercard’s First-Party Trust program seeks to eliminate first-party fraud from the payment ecosystem, creating a more equitable and balanced system for everyone.  By making additional data elements available during both the pre-authorization and dispute stage, merchants and issuers can be more confident in spotting cases of first-party fraud, which can lead to better approval rates.

First-party fraud accounts for 75% of fraud experienced by online businesses – and it continues to grow. Because issuers lack the insight to confidently evaluate first-party fraud claims, merchants shoulder much of the financial burden, experiencing losses revenue, inventory and time processing chargebacks.

Merchants will have the option to share enhanced data and insights at the time of the transaction or at the time of the dispute. To qualify for liability protection under the program, merchants must send one data point from each of the following categories:

• Device Factor: IP address, device ID, fingerprint 
• Delivery Factor: Shipping address, email, telephone number
• Additional identity factors: Account ID login, phone number, device location, device name, billing address.
   

Merchants must send one data element from each of the following categories: device factor and delivery factor. The third element must be either one of the listed additional identity factors or an unused element from device or delivery factor.