A 31% surge in first-party fraud is shifting risk to lenders — and younger borrowers are driving the trend

Consumers aged 35 and under account for the largest share of fraud-related credit loss in auto delinquency balances. This shift is not isolated — a 31% year-over-year rise in first-party fraud across Canada has lenders recalibrating risk models, especially as younger applicants increasingly misrepresent their financial reality to secure credit. First-party fraud, where individuals use their real identity but falsify income, employment, or debt data, nearly doubled in credit card applications, jumping from 0.08% to 0.15% between Q4 2024 and Q4 2025. The most common tactic: submitting contradictory or mismatched financial information, which now accounts for 77% of such cases, up from 59%. Ontario bore the brunt, with fraud-linked credit losses in the card sector hitting $123 million. Banking and deposits saw a parallel shift. While third-party fraud attempts fell from 0.45% to 0.32%, first-party fraud climbed from 0.51% to 0.68%. Falsified financial information surged within that category, leaping from 1.5% to 21% of cases. Account abuse also rose, from 14% to 24%. Auto and mortgage fraud rates declined overall, but delinquent portfolios still carry significant hidden losses — particularly among applicants aged 26 to 45 in mortgages and those 35 and under in auto lending. The trend reflects a broader change in consumer behavior, not just criminal opportunism. Lenders can no longer rely solely on identity verification; they must now detect inconsistencies in self-reported data. That’s where AI-driven systems like Equifax’s FraudIQ come in. The platform uses cross-sector data from Canada’s largest known fraud consortium to flag anomalies in real time. Such tools are now essential. They’ve helped institutions avoid an estimated $3 billion in fraud losses annually — a number that may need to grow as more borrowers blur the line between financial desperation and deception.