Please find below projects funded by IPA's Consumer Protection Research Initiative.

Increasing Repayment of Past Due Digital Credit Loans in Southern Africa
Researchers: Alfredo Burlando, Michael Kuhn, Silvia Prina, Brock Wilson
Country: N/A
Partner: N/A
Type of Research: Randomized Evaluation
Research Implemented by IPA: Yes

Digital credit is an increasing source of finance in low- and middle-income countries in Africa, providing borrowers quick access to short-term loans (Francis, et al 2017). However, evidence suggests that default rates for digital loans can be high (Brailovskaya, et al 2024; Carlson 2017; Burlando, et al 2021). This can decrease lenders’ profitability and prompt them to institute higher interest rates to recover losses. Meanwhile, loan delinquency can prevent borrowers from accessing digital credit in the future, in turn decreasing the potential for financial inclusion.

Researchers are partnering with IPA to measure whether repayment plans and notices about future loan eligibility increase borrowers’ repayment of past-due loans. A total of 4,000 borrowers who have loans more than 90 days past due have been randomly divided into the following groups:

• Repayment plan: Borrowers can repay loans over four equally-sized weekly installments and receive weekly SMS reminders about installment dates. If payments are missed, the balance is spread equally over the remaining weeks.
• Eligibility notices: Borrowers receive an SMS notice about their eligibility to receive future loans if they have repaid their loans in full within 30 days. They will also receive generic weekly SMS reminders to repay their loans.
• Repayment plan + eligibility notices: Borrowers can take up the repayment plan and receive the future loan eligibility notice.
• Comparison: Borrowers receive generic weekly SMS reminders to repay their loans and serve as the comparison group.

Results will be available later in 2024.

Analysis of Complaints Data in Mobile Financial Services
Researchers: Rafe Mazer, Matthew Bird
Country: Uganda
Partner: Uganda Communications Commission
Type of Research: Market Monitoring
Research Implemented by IPA: Yes, IPA Uganda

Complaints records of mobile network operators (MNOs) and other mobile financial service providers offer a first step to quantify the number and types of complaints in mobile financial services. IPA partnered with the Uganda Communications Commission to test and implement new tools for the analysis of complaints data from MNOs to provide additional insights on consumer issues with fraud, pricing, and the effectiveness of dispute resolution in mobile communications and mobile financial services. The analysis is based on 20 months of customer care logs from MNOs in Uganda. This research is complemented by a separate demand-side survey, which offers context to the insights from the official complaints data and allows for a comparison of those digital finance consumers who use formal complaints channels when problems arise, and those who remain silent or pursue other methods for resolution.

Analysis of Transactional Data to Monitor Consumer Risks in Digital Credit
Researchers: Daniel Putman, Rafe Mazer
Country: Kenya
Partner: Competition Authority of Kenya
Type of Research: Market Monitoring
Research Implemented by IPA: Yes, IPA Kenya

Kenya’s digital credit market has expanded rapidly in the past five years. This has increased access but has also led to new consumer risks. For example, the portion of financially healthy Kenyans in the 2019 FinAccess Survey was 21.7%, compared to 39.4% in 2016. This creates an urgent need for monitoring of the digital credit market to develop policies to improve product suitability and responsible lending. Digital credit’s use of mobile money transaction channels creates the ability for new market monitoring tools that can provide insights into how digital credit is used and which consumer segments may be at risk of negative outcomes from high-cost, short-term loans. This model has been piloted in other East African markets by the leadership of this proposal, and Kenya’s number-one ranking in mobile money penetration makes it the perfect market for similar such analysis. Working with the Competition Authority of Kenya (CAK), the researchers piloted a transaction-level monitoring tool for digital credit products, which was used to identify consumer protection issues and priorities as part of the CAK’s Digital Credit Market Inquiry.

BSP - Market Conduct and Consumer Engagement
Researchers: Rafe Mazer, Yuna Liang, Marieliz Maines
Country: Philippines
Partner: Bangko Sentral ng Pilipinas (BSP)
Type of Research: Market Monitoring Research
Implemented by IPA: No

This study has two main activities, namely the Chatbot data analysis and Social media analysis. This project, therefore, focuses on enhancing the performance of the Bangko Sentral ng Pilipinas (BSP) Chatbot, which assists consumers in their complaints against banks and other financial institutions under the supervision of the central bank. Additionally, the project will focus on the use of social media data for effective service delivery in meeting the customers' needs. The ultimate goal of the project is to harness the capabilities of the Chatbot and enhance it to handle complaints against financial institutions it is supporting. The project has two main tasks. The first task entails a comprehensive analysis of the Chatbot dataset and the development of a data analytics team through capacity building. The second task relates to the social media project in which a pilot social media data collection and analysis will be done; a set of social media data analysis tools and strategy identified, and social media data analytics capacity building done.

Combating Fraudulent Fintech with Machine Learning
Researchers: Jonathan Fu, Mrinal Mishra
Countries: India, Nigeria, Philippines
Partner: N/A
Type of Research: Market Monitoring Research
Implemented by IPA: No

There has been a sharp rise in the prevalence of fraudulent finance-related mobile applications in recent years, which has corresponded with the proliferation of mobile access and fintech supplies worldwide. Many consumers, particularly in emerging and developing economies, have fallen victim to such fraudulent apps, particularly following the onset of COVID-19. To combat this, we propose leveraging high-frequency app data and analysis, including machine learning techniques, to create a system for flagging and reporting highly suspect apps. As a pilot project, we plan to first test and demonstrate the effectiveness and efficiency of such methods on a smaller set of priority countries and historical data. A subsequent project could then build on this foundation to transform the tool into a real-time monitoring solution for a broad range of countries.

Do Anonymous Ratings Build Trust in Mobile Money Agents? A Lab Study in Kenya and Uganda
Researchers: Isabel Macdonald, Paul Gertler
Country: Kenya, Uganda
Partner: N/A
Type of Research: Pilot RCT
Research Implemented by IPA: No

Agent fraud harms mobile money systems through a direct effect on defrauded consumers and an indirect effect where fear of fraud restricts usage and willingness to test agents. This pilot study addresses the latter effect through a lab study with mobile money consumers in Kenya and Uganda. It explores whether users, particularly women and older people, are willing to pay more to transact with agents they know and trust. It also tests whether anonymous customer ratings increase consumer willingness to visit unknown agents and how willingness to pay for ratings compares to the willingness to pay for personal referrals. These results will establish whether agent ratings positively impact consumers and validate critical steps in the theory of change of how ratings can reduce the negative effects of fraud. These results also lay the groundwork for a full implementation of ratings systems to analyze the impact of ratings on fraud incidence.

Detecting and Preventing Commission and Account Opening Overcharging using Citizen Science
Researchers: Tomoki Fujii, Abu S. Shonchoy
Country: Bangladesh
Partner: N/A
Type of Research: Full RCT
Research Implemented by IPA: Yes, IPA Bangladesh

Mobile financial services (MFS) have spread rapidly in the developing world. They have reached many previously unbanked persons, but they have also created opportunities for dishonest agents to overcharge vulnerable populations. This is difficult for both MFS providers and regulators to resolve because it is too costly to monitor agents closely. Additionally, restricting agents’ behavior may drive away some unbanked clients or induce agents to switch to a different MFS provider. Researchers will explore a citizen science approach using high-frequency real-time crowdsourced data, gathered by youth volunteers, to detect agents’ overcharging behavior. To ensure data quality, researchers plan to utilize “mystery shoppers” to verify reliability and accuracy. The researchers will also test the efficacy of information campaigns against overcharging using aggregate agent ratings from the crowdsource app. This will generate evidence on whether the citizen science approach can help address overcharging by mobile money agents.

A Digital Bridge Over Troubled Waters: Strategies for Reducing Non-Institutional Fraud and Building Trust in a Digital Market Platform
Researchers: Michael King, Chaning Jang, Daniel Putman
Country: Nigeria
Partner: CoAmana Market Limited
Type of Research: Full RCT
Research Implemented by IPA: Yes, IPA Nigeria

The prevalence of fraud in Nigeria makes it difficult for micro-, small- and medium-sized enterprises (MSMEs) to distinguish between real communications from digital service providers, and phishing messages from scammers. This leads to a lack of trust and an unwillingness to use digital services. To address this, researchers will explore two promising solutions—a Unique Communication Code (a communications security tool) and customer education on fraud risks—to ascertain their impacts on susceptibility to non-institutional fraud and trust in digital financial services. Conducted in partnership with CoAmana Market, a digital platform in Nigeria that offers access to market information and financial services to MSMEs, this study involves a randomized evaluation with newly onboarded MSMEs and a lab study. Researchers will measure outcomes around susceptibility to fraud, trust in platforms, and engagement with platforms. Findings will help improve consumer protection and support digital security for Africa’s large and growing platform and financial services sectors.

Increasing Mobile Banking Use among Rural Populations in Ghana: Fraud as a Barrier to Mobile Banking Adoption
Researchers: Abu S. Shonchoy, Emma Riley
Country: Ghana
Partner: Opportunity International Savings & Loans
Type of Research: Pilot RCT
Research Implemented by IPA: Yes, IPA Ghana

This pilot examines fraud as a barrier to adopting mobile banking services in Ghana. The researchers will use an existing field study and develop additional training targeted at recognizing and preventing fraud for women microfinance clients in rural areas. The researchers will examine the impact of this training on the adoption and use of mobile banking services. Additionally, the researchers will measure perceptions of fraud, trust in mobile banking services, and rankings of the importance of fraud relative to other factors, such as knowledge and cost, in the decision to adopt mobile money. Through randomized provision of the fraud training module and careful measurement of how fraud and trust impact adoption decisions, the researchers will examine the extent to which fraud acts as a barrier to adopting mobile banking services. The pilot will inform the design of the full randomized evaluation.

Kenya Consumer Protection Survey of Digital Finance Consumers
Researchers: William Blackmon, Rafe Mazer, Shana Warren
Country: Kenya
Partner: Competition Authority of Kenya
Type of Research: Market Monitoring Research
Implemented by IPA: Yes, IPA Kenya

According to the 2019 FinAccess survey, 8.4% of mobile money users in Kenya report having lost funds on their mobile money accounts—and 70% of these cases were due to third-party phone or SMS fraud. Yet no one has unpacked why certain consumers suffer from fraud, nor why they often don’t use formal complaints channels when they suffer loss of funds or fraud. Similarly, FinAccess found that 42% of mobile money users could not correctly interpret the price disclosure screen, and 19% of digital borrowers report issues with transparency of fees. Yet little is known how this influences financial decisions and what new information or delivery channels may impact knowledge and choice. This survey asked users of digital financial services their experiences with common consumer protection challenges such as phishing scams, consumer redress, and debt stress, and how these experiences have impacted their use of digital financial services.

Examining the Impact of Loan Modifications on Borrowers in Kenya During COVID-19
Researchers: Waldo Ojeda and Sheisha Kulkarni
Country: Kenya
Partner: Kiva
Type of Research: Market Monitoring Research
Research Implemented by IPA: Yes, IPA Kenya

Given the global economic consequences of COVID-19, many lenders have set up forbearance or repayment plans programs for borrowers experiencing financial hardship. While loan modification reduces loan losses by 35.8% (Maturana (2017)), there has been some disagreement about how to modify loans in order to reduce loan losses. Dobbie and Song (2015) find that decreasing interest payments increased debt repayment, the probability of being employed, and lowered the probability of filing for bankruptcy as compared to extending the maturity of the loan. In a subsequent paper, Dobbie and Song (2020) find that lowering the principal balance improved financial and labour market outcomes for borrowers more than if the monthly payments were reduced to aid borrower liquidity. In contrast, Ganong and Noel (2020) find that principal reductions don't actually change default and that decreases in short-term monthly payments make the most difference for borrowers’ ability to pay.

This project aims to evaluate loan modification programs that have already been tried by banks as a response to COVID-19 and test if these programs and other potential programs help borrowers repay their loans and help their households towards financial solvency through a subsequent randomized control trial experiment.

Lawyers for Consumer Protection: Evidence from a Field Exercise in Uganda
Researcher: Matthieu Chemin
Country: Uganda
Partner: Centre for Technology Disputes Resolution – Uganda (CTDR-U)
Type of Research: Full RCT
Research Implemented by IPA: Yes, IPA Uganda

A recent survey from the IPA Consumer Protection Research Initiative in Uganda found that 99 percent of the sample used mobile money services and 49 percent encountered a significant challenge or a financial loss. These losses hurt consumers, reduce trust in mobile network operators, and negate the positive effects of mobile money. Unfortunately, the same IPA survey found that only 20 percent of those with a challenge managed to resolve their dispute, and none used the services of a lawyer. This intervention will be the first randomized evaluation offering free access to lawyers to consumers involved in mobile money disputes. The Centre for Technology Disputes Resolution will assist consumers using an innovative legal strategy to resolve disputes. Researchers will undertake a randomized evaluation to understand the efficacy of this new model. This study could generate important policy implications for legal aid reforms to serious mobile money consumer protection issues, including high and hidden prices, contract exploitation, and fraud.

Nigeria Consumer Protection in Digital Finance Consumer Survey
Researchers: Shana Warren, Rafe Mazer, William Blackmon
Country: Nigeria
Partner: N/A
Type of Research: Market Monitoring Research
Implemented by IPA: Yes, IPA Nigeria

The opening of Nigeria’s mobile money system to non-banks, as well as new Unstructured Supplementary Service Data (USSD) and agent banking products from commercial banks, presents the potential for digital finance to take off in the country. To maximize the benefits of digital inclusion, expansion of use should occur alongside sufficient consumer protection policies and responsible product design. Yet existing surveys on financial access have provided only limited insights on consumer protection-relevant issues, and have not probed on the drivers of issues such as fraud and loss of trust in digital products. This survey provides initial evidence on the experiences and consumer protection risks in mobile and agent-based financial services. The researchers surveyed digital finance users—active and dormant—in Lagos, Kaduna. and Enugu states, focusing on locations with sufficient agent networks to indicate a digital finance consumer base given the low digital finance usage levels at the national level (only an estimated 3.3% of adults have used mobile money in Nigeria). The survey asked active and dormant users of electronic payments products, mobile banking products, agent banking, and digital credit their experiences on key consumer protection topics including: Pricing transparency; Fraud; Agent conduct; Complaints handling and redress.

Nigeria Digital Financial Services Transactions Audit Study
Researchers: William Blackmon, Brian Mwesigwa, Rafe Mazer
Country: Nigeria
Partner: Africa Practice, Lagos Business School
Type of Research: Market Monitoring Research
Implemented by IPA: Yes

Nigeria has a relatively underdeveloped digital financial service landscape poised for significant growth. However, high fees and a lack of pricing transparency act as a barrier to growth, especially for low-income and rural populations. In response, the Central Bank of Nigeria set a series of limits on fees, which banks and mobile money providers may charge DFS customers, though evidence suggests that these regulations are not always followed. A prior study by IPA in 2020 found that 33% of digital finance consumers experienced overcharging by a financial agent, while 29% reported unexpected fees or charges by their provider. This study seeks to quantify the costs of these additional charges, utilizing two research components. First, we will create a comprehensive listing of regulated limits to customer fees for digital finance transactions. Second, we will audit actual fees by conducting digital finance transactions and compare these with the regulated limits. Results from this study will provide robust data on an often misunderstood and significant consumer protection risk and will be used to inform future work on improving compliance with customers’ fee regulations or determining more appropriate regulatory limits on customers’ fees.

Scam Identification Ability, Confidence, and the Use of Digital Financial Services
Researchers: Lisa Spantig, Jana Cahlíková, Lucy Kaaria, Elif Kubilay, Eva Raiber
Countries: Kenya, Uganda
Partner: Nendo Limited
Type of Research: Pilot RCT
Research Implemented by IPA: No

The recent expansion in digital financial service (DFS) and related technologies in developing countries has opened the door to many issues related to consumer protection, including fraud. Fraud creates direct costs for affected consumers and can erode trust in specific providers or entire markets. The project focuses on phone scams, the most prevalent form of fraud related to DFS both in Kenya and Uganda. Using mixed methods, researchers will develop a measure of scam identification ability (SIA). Researchers will then assess the measure in a large-scale online survey in Kenya. The data will allow researchers to correlate SIA with demographic characteristics, self-reported use of DFS, and exposure to scams. The pilot will provide insights into the feasibility of interventions to increase SIA and confidence. Based on this evidence and feedback from stakeholders, the researchers will design an intervention that tackles the issue of phone scams and measure its impact through a randomized evaluation.

Social Media Monitoring and Data Analysis
Researchers: Melissa Tully, Dani Madrid-Morales
Countries: Kenya, Nigeria, and Uganda
Partner: N/A
Type of Research: Market Monitoring
Research Implemented by IPA: Yes, IPA US

As financial services digitize, more consumers are sharing their experiences and raising concerns or issues with financial services through social media like Twitter, WhatsApp, or Facebook. Social media data provides additional insights into which issues are affecting digital consumers and how well providers respond to complement official complaints returns from providers and regulators. This project identifies and analyzes consumer protection-relevant content on social media in Kenya, Nigeria, and Uganda to explore their relevance as data sources for consumer protection market monitoring.

Uganda Consumer Protection in Digital Finance Consumer Survey
Researchers: Matthew Bird
Country: Uganda
Partner: Uganda Communications Commission
Type of Research: Market Monitoring
Research Implemented by IPA: Yes, IPA Uganda

The InterMedia Financial Inclusion Insights Surveys have consistently shown Uganda to have the highest levels of consumer fraud in mobile money amongst countries surveyed in Africa and Asia. These surveys have also documented insufficient consumer use of formal complaints channels. Fraud risk and lack of proper redress channels can reduce the use of digital financial services, and may in part explain why many Ugandans still use Over-the-Counter transactions despite having registered mobile wallets.

Yet beyond higher-level statistics on fraud, little is known about why these frauds occur, their shifting nature, and why consumers do or do not raise these and other consumer protection issues via formal channels. This survey measures the experiences of Ugandan users of mobile money, digital banking, and digital credit products to identify consumer protection risks related to fraud in digital finance and complaints handling and redress.

Understanding the Role of Locus of Control and Self-efficacy on Consumer Redress for Women in Rural India
Researchers: Sharon Barnhardt, Sanna Balsari-Palsule
Country: India
Partner: N/A
Type of Research: Pilot RCT
Research Implemented by IPA: No

Women’s access to and engagement with digital financial services (DFS) in low- and middle-income countries has increased in recent years. However, notably absent from both academic and practitioner research is a focus on gender and consumer redress. Despite the severity of the societal, social, and individual barriers that limit women’s ability to raise complaints and resolve disputes, empirical evidence is thin and fragmented. Situating our research in India—a leading DFS market—the pilot examines the role of intrinsic factors—the locus of control and self-efficacy—in determining how women perceive and manage consumer redress behaviors. These behaviors include raising complaints, seeking alternative complaints channels, or inaction. The results from this pilot will lay the groundwork for further studies that design and test behaviorally informed, tailored interventions for improving the consumer redress experience for women.

Using Predictive Modeling to Target Fraud Prevention in Uganda
Researcher: Matthew Bird, Rafe Mazer
Country: Uganda
Partner: Uganda Communications Commission (UCC)
Type of Research: Pilot RCT
Research Implemented by IPA: Yes, IPA Uganda

Financial fraud is harmful for any vulnerable population, but especially in developing countries where people rely increasingly on digital financial services (DFS). IPA survey data in Uganda indicates that users have experienced acute levels of fraud, while those with unresolved complaints were more likely to stop or reduce DFS usage. Since complaints and redress channels are important elements of consumer protection systems, but they occur after scam attempts, providers are often difficult to contact, and responses can be slow. Providers and regulators should also aim to lower the probability of successful fraud attempts before they occur. This project seeks to leverage complaints records and DFS user information from the regulator, mobile network operators (MNOs), and social media to develop predictive models of third-party fraud. These models would be used to proactively intervene with the fraudsters’ most likely targets to prevent victimization prior to scam attempts. This pilot proposal will test solutions which regulators, financial service providers, and MNOs could use to identify users and prevent financial loss, reducing both direct and indirect costs to consumers and providers.

Welfare Scoring for Digital Credit
Researchers: Daniel Björkegren, Joshua Blumenstock
Country: Nigeria
Partner: N/A
Type of Research: Market Monitoring
Research Implemented by IPA: No

This project evaluates the possibility of measuring the welfare effects of a digital credit product in Nigeria and then summarizing these into welfare scores that can be assessed to develop probabilities a loan will have a positive or negative welfare effect on a borrower. The research builds off of a completed impact evaluation of the digital credit product and will provide important insights on the trade-offs between expanding access, profitability, and borrower welfare that can inform responsible digital lending policies.