Gen Zers think the economy is so unfair that fraud is OK

Sift, an AI-powered fraud decisioning platform, released its Q1 report showing a third of Gen Z either knows someone who has committed first-party fraud or done so themselves.

Sift said the Zoomers were purposefully disputing charges they knew to be legitimate. The new findings bookend the company’s Q4 report which found that 42% of Gen Z admitted to committing first-person fraud.

Gen Zers’ rate of fraud is higher than all other generations. In the same Q1 report, just 10% of Baby Boomers said they either knew someone who committed fraud or did so themselves.

Sift’s CEO Kris Nagel wrote in an essay in Forbes that while the data “might seem sensational,” it’s actually “very telling” about the state of the economy.

Nagel cited an Intuit $INTU study that found 73% of Zoomers say it’s challenging to save money. Young people are struggling with inflation, student loan debt and a housing crisis while wages stagnate, he said. “These factors snowball into a financially stressful situation that makes it more challenging to afford day-to-day necessities.”

“Facing the wrong set of circumstances, some people will turn to stolen payment methods or chargebacks to get more with less,” Nagel wrote. “In these situations, consumers may rationalize fraudulent behavior by convincing themselves that their actions are necessary or justified given the economic environment.”

The CEO also said that Gen Z may not feel particularly loyal to the companies they are pilfering from and instead see large corporations as part of the reasons for their financial struggles.

“They may view their actions as a temporary solution, or even as a moral gray area with few consequences to anyone,” he wrote.

While Nagel doesn’t have all the solutions, he outlined a few suggestions for combatting Gen Z’s reported penchant for fraud. He suggests companies emphasize social responsibility, offer flexible payment plans, make sure they have clear return policies and prioritize customer service.

“The willingness of Gen Z to engage in online fraud is a reflection of the complex interplay of economic pressures, changing consumer behaviors, and the influence of social media,” he wrote. “This trend, while having a real business impact, stems from a place of financial stress, a desire for affordability, and a distinct approach to brand loyalty and consumption.”