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A new and disturbing trend among Gen Zers has been uncovered by two consecutive reports from Sift, an AI-powered fraud decisioning platform. In Q4 2023, the Sift report found that 42% of Gen Zers admitted to committing first-person fraud (compared to 22% of millennials). Sift’s Q1 2024 report found that 33% of Gen Z-ers either know someone who has committed fraud or have done so themselves (compared to 10% of baby boomers).
These reports indicate that Gen Z-ers are committing fraud at unprecedented levels.
Why?
Gen Z Fraud Reflects the Struggling Economy
According to Sift CEO Kris Nagel, who published an article on the topic in Fortune, these numbers not only reflect the state of Gen Z, but that of the economy. He cited inflation, student loan debt, the housing crisis, and stagnant wages as factors that “snowball into a financially stressful situation that makes it more challenging to afford day-to-day necessities.”
Many people react to financial stress in non-criminal ways, such as cutting down on non-essentials, switching to generic brands, and buying second hand. In fact, 42% of Gen Z-ers shop for secondhand items online, the highest percentage of any generation.
Unfortunately, one third of Gen Z has reacted to financial stress by committing fraud, typically by disputing legitimate charges or using stolen payment methods. They rationalize their actions by blaming large corporations for their financial stress. They feel no loyalty to these corporations, and convince themselves that the fraud is justified because:
- It is temporary
- They need this money to live
- It’s a “victimless” crime — they don’t view corporations as victims
It does not help that several social media influencers have been promoting fraud, complete with details about how to hack into other people’s accounts and use their credit cards.
A Possible Solution
Nagel’s approach is to call for empathy, understanding, and a solution. He wrote, “it’s essential to view these findings and recommendations not as an indictment of a generation but as a window into a group that is increasing its purchasing power, even as it faces more economic hurdles.”
As for the solution, he recommends that brands emphasize social responsibility, offer flexible payment options, and prioritize customer service in an effort to mitigate Gen Z’s financial challenges, while protecting their business interests.
Sift’s upcoming quarterly reports will provide evidence as to whether these tactics are effective.