The Threat of Replay Attacks and What It Means for Your Business

Fraud is evolving faster than ever, driven by digitalization, real-time payments and increasingly sophisticated scams. For Warren Jones and his team at Santander Bank, staying ahead requires more than tools. It requires the right partner. The partnership with Santander Bank began nearly a decade ago, during a period of rapid change in the fraud and banking landscape. Since then, the relationship has grown into a long-term collaboration focused on continuous improvement and innovation. Experian products helped Santander address one of its most pressing operational challenges: a high-volume manual review queue for new account applications. While the vast majority of alerts in the queue were fraudulent and ultimately declined, a small percentage represented legitimate customers whose account openings were delayed. This created inefficiencies for staff and a poor first impression of genuine applicants. We worked alongside Santander to tackle this challenge head-on, transforming how applications were reviewed, how fraud was detected and how legitimate customers were approved. In addition to fraud prevention, implementing Experian's Ascend PlatformTM, with its intuitive user experience and robust data environment, has unlocked additional value across the organization. The platform supports multiple use cases, enabling collaboration between fraud and marketing teams to align strategies based on actionable insights. Learn more about our Ascend Platform

For lenders, the job has never been more complex. You’re expected to protect portfolio performance, meet regulatory expectations, and support growth, all while fraud tactics evolve faster than many traditional risk frameworks were designed to handle. One of the biggest challenges of the job? The line between credit loss and fraud loss is increasingly blurred, and misclassified losses can quietly distort portfolio performance. First-party fraud can look like standard credit risk on the surface and synthetic identity fraud can be difficult to identify, allowing both to quietly slip through decisioning models and distort portfolio performance. That’s where fraud risk scores come into play. Used correctly, they don’t replace credit models; they strengthen them. And for credit risk teams under pressure to approve more genuine customers without absorbing unnecessary losses, understanding how fraud risk scores fit into modern decisioning has become essential. What is a fraud risk score (and what isn’t it) At its core, a fraud risk score is designed to assess the likelihood that an applicant or account is associated with fraudulent behavior, not simply whether they can repay credit. That distinction matters. Traditional credit scores evaluate ability to repay based on historical financial behavior. Fraud risk scores focus on intent and risk signals, patterns that suggest an individual may never intend to repay, may be manipulating identity data, or may be building toward coordinated abuse. Fraud risk scores are not: A replacement for credit scoring A blunt tool designed to decline more applicants A one-time checkpoint limited to account opening Instead, they provide an additional lens that helps credit risk teams separate true credit risk from fraud that merely looks like credit loss. How fraud scores augment decisioning Credit models were never built to detect fraud masquerading as legitimate borrowing behavior. Consider common fraud scenarios facing lenders today: First-payment default, where an applicant appears creditworthy but never intends to make an initial payment Bust-out fraud, where an individual builds a strong credit profile over time, then rapidly maxes out available credit before disappearing Synthetic identity fraud, where criminals blend real and fabricated data to create identities that mature slowly and evade traditional checks In all three cases, the applicant may meet credit criteria at the point of decision. Losses can get classified as charge-offs rather than fraud, masking the real source of portfolio degradation. When credit risk teams rely solely on traditional models, the result is often an overly conservative response: tighter credit standards, fewer approvals, and missed growth opportunities. How fraud risk scores complement traditional credit decisioning Fraud risk scores work best when they augment credit decisioning. For credit risk officers, the value lies in precision. Fraud risk scores help identify applicants or accounts where behavior, velocity or identity signals indicate elevated fraud risk — even when credit attributes appear acceptable. When integrated into decisioning strategies, fraud risk scores can: Improve confidence in approvals by isolating high-risk intent early Enable adverse-actionable decisions for first-party fraud, supporting compliance requirements Reduce misclassified credit losses by clearly identifying fraud-driven outcomes Support differentiated treatment strategies rather than blanket declines The goal isn’t to approve fewer customers. It’s to approve the right customers and to decline or treat risk where intent doesn’t align with genuine borrowing behavior. Fraud risk across the credit lifecycle One of the most important shifts for credit risk teams is recognizing that fraud risk is not static. Fraud risk scores can deliver value at multiple stages of the credit lifecycle: Marketing and prescreen: Fraud risk insights help suppress high-risk identities before offers are extended, ensuring marketing dollars are maximized by targeting low risk consumers. Account opening and originations: Real-time fraud risk scoring supports early detection of first-party fraud, synthetic identities, and identity misuse — before losses are booked. Prequalification and instant decisioning: Fraud risk scores can be used to exclude high-risk applicants from offers while maintaining speed and customer experience. Account management and portfolio review: Fraud risk doesn’t end after onboarding. Scores applied in batch or review processes help identify accounts trending toward bust-out behavior or coordinated abuse, informing credit line management and treatment strategies. This lifecycle approach reflects a broader shift: fraud prevention is no longer confined to front-end controls — it’s a continuous risk discipline. What credit risk officers should look for in a fraud risk score Not all fraud risk scores are created equal. When evaluating or deploying them, credit risk officers should prioritize: Lifecycle availability, so fraud risk can be assessed beyond originations Clear distinction between intent and ability to repay, especially for first-party fraud Adverse-action readiness, including explainability and reason codes Regulatory alignment, supporting fair lending and compliance requirements Seamless integration alongside existing credit and decisioning frameworks Increasingly, credit risk teams also value platforms that reduce operational complexity by enabling fraud and credit risk assessment through unified workflows rather than fragmented point solutions. A more strategic approach to fraud and credit risk The most effective credit risk strategies today are not more conservative, they’re more precise. Fraud risk scores give credit risk officers the ability to stop fraud earlier, classify losses accurately and protect portfolio performance without tightening credit across the board. When fraud and credit insights work together, teams can gain a clearer view of risk, stronger decision confidence and more flexibility to support growth. As fraud tactics continue to evolve, the organizations that succeed will be those that can effectively separate fraud from credit loss. Fraud risk scores are no longer a nice-to-have. They’re a foundational tool for modern credit risk strategies. How credit risk teams can operationalize fraud risk scores For credit risk officers, the challenge isn’t just understanding fraud risk, it’s operationalizing it across the credit lifecycle without adding friction, complexity or compliance risk. Rather than treating fraud as a point-in-time decision, credit risk teams should assess fraud risk where it matters most, from acquisition through portfolio management. Fraud risk scores are designed to complement credit decisioning by focusing on intent to repay, helping teams distinguish fraud-driven behavior from traditional credit risk. Key ways Experian supports credit risk teams include: Lifecycle coverage: Experian award-winning fraud risk scores are available across marketing, originations, prequalification, instant decisioning and ongoing account review. This allows organizations to apply consistent fraud strategies beyond account opening. First-party and synthetic identity fraud intelligence: Experian’s fraud risk scoring addresses first-payment default, bust-out behavior and synthetic identity fraud, which are scenarios that often bypass traditional credit models because they initially appear creditworthy. Converged fraud and credit decisioning: By delivering fraud and credit insights together, often through a single integration, Experian can help reduce operational complexity. Credit risk teams can assess fraud and credit risk simultaneously rather than managing disconnected tools and workflows. Precision over conservatism: The emphasis is not on declining more applicants, but on approving more genuine customers by isolating high-risk intent earlier. This precision helps protect portfolio performance without sacrificing growth. For lenders navigating increasing fraud pressure, Experian’s approach reflects a broader shift in the industry: fraud prevention and credit risk management are no longer separate disciplines; they are most effective when aligned. Explore our fraud solutions Contact us

For many banks, first-party fraud has become a silent drain on profitability. On paper, it often looks like classic credit risk: an account books, goes delinquent, and ultimately charges off. But a growing share of those early charge-offs is driven by something else entirely: customers who never intended to pay you back. That distinction matters. When first-party fraud is misclassified as credit risk, banks risk overstating credit loss, understating fraud exposure, and missing opportunities to intervene earlier.  In our recent Consumer Banker Association (CBA) partner webinar, “Fraud or Financial Distress? How to Differentiate Fraud and Credit Risk Early,” Experian shared new data and analytics to help fraud, risk and collections leaders see this problem more clearly. This post summarizes key themes from the webinar and points you to the full report and on-demand webinar for deeper insight. Why first-party fraud is a growing issue for banks  Banks are seeing rising early losses, especially in digital channels. But those losses do not always behave like traditional credit deterioration. Several trends are contributing:  More accounts opened and funded digitally  Increased use of synthetic or manipulated identities  Economic pressure on consumers and small businesses  More sophisticated misuse of legitimate credentials  When these patterns are lumped into credit risk, banks can experience:  Inflation of credit loss estimates and reserves  Underinvestment in fraud controls and analytics  Blurred visibility into what is truly driving performance   Treating first-party fraud as a distinct problem is the first step toward solving it.  First-payment default: a clearer view of intent  Traditional credit models are designed to answer, “Can this customer pay?” and “How likely are they to roll into delinquency over time?” They are not designed to answer, “Did this customer ever intend to pay?” To help banks get closer to that question, Experian uses first-payment default (FPD) as a key indicator. At a high level, FPD focuses on accounts that become seriously delinquent early in their lifecycle and do not meaningfully recover.  The principle is straightforward:  A legitimate borrower under stress is more likely to miss payments later, with periods of cure and relapse.  A first-party fraudster is more likely to default quickly and never get back on track.  By focusing on FPD patterns, banks can start to separate cases that look like genuine financial distress from those that are more consistent with deceptive intent.  The full report explains how FPD is defined, how it varies by product, and how it can be used to sharpen bank fraud and credit strategies. Beyond FPD: building a richer fraud signal  FPD alone is not enough to classify first-party fraud. In practice, leading banks are layering FPD with behavioral, application and identity indicators to build a more reliable picture. At a conceptual level, these indicators can include:  Early delinquency and straight-roll behavior  Utilization and credit mix that do not align with stated profile  Unusual income, employment, or application characteristics High-risk channels, devices, or locations at application Patterns of disputes or behaviors that suggest abuse  The power comes from how these signals interact, not from any one data point. The report and webinar walk through how these indicators can be combined into fraud analytics and how they perform across key banking products.  Why it matters across fraud, credit and collections Getting first-party fraud right is not just about fraud loss. It impacts multiple parts of the bank. Fraud strategy Well-defined quantification of first-party fraud helps fraud leaders make the case for investments in identity verification, device intelligence, and other early lifecycle controls, especially in digital account opening and digital lending. Credit risk and capital planning When fraud and credit losses are blended, credit models and reserves can be distorted. Separating first-party fraud provides risk teams a cleaner view of true credit performance and supports better capital planning.  Collections and customer treatment Customers in genuine financial distress need different treatment paths than those who never intended to pay. Better segmentation supports more appropriate outreach, hardship programs, and collections strategies, while reserving firmer actions for abuse.  Executive and board reporting Leadership teams increasingly want to understand what portion of loss is being driven by fraud versus credit. Credible data improves discussions around risk appetite and return on capital.  What leading banks are doing differently  In our work with financial institutions, several common practices have emerged among banks that are getting ahead of first-party fraud: 1. Defining first-party fraud explicitly They establish clear definitions and tracking for first-party fraud across key products instead of leaving it buried in credit loss categories.  2. Embedding FPD segmentation into analytics They use FPD-based views in their monitoring and reporting, particularly in the first 6–12 months on book, to better understand early loss behavior.  3. Unifying fraud and credit decisioning Rather than separate strategies that may conflict, they adopt a more unified decisioning framework that considers both fraud and credit risk when approving accounts, setting limits and managing exposure.  4. Leveraging identity and device data They bring in noncredit data — identity risk, device intelligence, application behavior — to complement traditional credit information and strengthen models.  5. Benchmarking performance against peers They use external benchmarks for first-party fraud loss rates and incident sizes to calibrate their risk posture and investment decisions.  The post is meant as a high-level overview. The real value for your teams will be in the detailed benchmarks, charts and examples in the full report and the discussion in the webinar.  If your teams are asking whether rising early losses are driven by fraud or financial distress, this is the moment to look deeper at first-party fraud.  Download the report: “First-party fraud: The most common culprit”  Explore detailed benchmarks for first-party fraud across banking products, see how first-payment default and other indicators are defined and applied, and review examples you can bring into your own internal discussions.  Download the report Watch the on-demand CBA webinar: “Fraud or Financial Distress? How to Differentiate Fraud and Credit Risk Early”  Hear Experian experts walk through real bank scenarios, FPD analytics and practical steps for integrating first-party fraud intelligence into your fraud, credit, and collections strategies.  Watch the webinar First-party fraud is likely already embedded in your early credit losses. With the right analytics and definitions, banks can uncover the true drivers, reduce hidden fraud exposure, and better support customers facing genuine financial hardship.