The reason for the prevalence of fraudulent activities among Generation Z members remains a growing question.

In the digital age, online shopping has become a common activity for many, especially among the younger generation. A study by Javelin Strategy & Research reveals that Gen Z, characterised by their online-centric lifestyle, is the most active in online shopping, with 32% of Gen Z consumers shopping online at least once daily.

However, this high online activity also makes Gen Z more susceptible to committing first-party fraud, a phenomenon that has been on the rise. Suzanne Sando, Senior Analyst, Fraud and Security at Javelin Strategy & Research, stated that the lack of brand loyalty in the younger generation plays into their willingness to commit first-party fraud.

First-party fraud, as defined by the survey, involves disputing a transaction even though the item was received and the individual was generally satisfied with it. According to the same survey, 42% of Gen Zers admit to engaging in first-party fraud.

The distrust of capitalism among Gen Z, as seen in a quote from Vice in 2020, further contributes to this trend. A teenage consumer was quoted as saying, "We have so many companies that don't care about their customers, only making money. If we can punish the corporation, we feel we have done our best."

This distrust often extends to viewing defrauding large corporations as not immoral. Gen Z's feeling of entitlement, a feeling that they are owed something from these larger corporations, also plays a role.

Background situations such as exposure to misinformation and fake news through social media, limited digital literacy, and political disengagement influenced by economic disparities and educational gaps, have also been cited as contributing factors. The prevalence of manipulated digital content such as deepfakes further contributes to mistrust and unethical behavior patterns in this generation.

The category that saw the greatest increase in fraud attempts was internet gaming, with attempted fraud payments in gaming jumping by 93% in 2023. This trend was also observed by Rebecca Alter, Trust and Safety Architect at Sift, who stated in their report that they are seeing a trend of younger generations taking advantage of consumer-friendly chargeback protections.

Interestingly, while Gen Z is more likely to personally participate in payment fraud or know someone who has, millennials shop online less frequently, with 25% shopping online at least once daily, and older generations such as Gen Xers and baby boomers shop online even less frequently, with 15% and 7% shopping online at least once daily, respectively.

Detecting this kind of first-party fraud is difficult because it requires determining the difference between a consumer who unwittingly committed fraud versus a consumer who willingly perpetrated the crime for their own benefit. The survey conducted by fraud platform Sift reveals that Gen Z has the highest rate of fraud among all generations, highlighting the need for stricter fraud detection measures in the digital shopping landscape.

The reason for the prevalence of fraudulent activities among Generation Z members remains a growing question.