In February 2020, IPA officially launched our Consumer Protection Research Initiative, with the goal of generating cutting-edge research to better understand and mitigate consumer risks for digital finance users in emerging markets. While some early pivots were needed—you may recall consumer protection research wasn’t the only thing launched in early 2020—we’re extremely proud of the portfolio of work we’ve generated over the past five years. 

We’ve completed more than 20 studies exploring a range of consumer risks, including: 

• the rise of digital fraud
• opaque terms and conditions that lead to unexpected fees
• easily accessible credit that can push consumers towards overindebtedness
• and ineffective customer service which leaves consumers' concerns unresolved. 

A few examples: we worked with the Competition Authority of Kenya to analyze administrative data from digital credit providers to understand where these loans might be causing harm, and how the government and private sector can push the market to offer products that better meet the needs of consumers. In Nigeria, we audited financial service providers' websites and customer care lines to see what was disclosed about prices, then compared this to the actual costs we paid during test transactions, often finding stark differences. In Uganda, we tested interactive, narrative stories, deployed via Interactive Voice Response phone calls (the “press one for English…” technology) to improve consumers’ ability to identify and prevent fraud. And in the Philippines, we worked with the central bank to improve their chatbot, “BOB”, designed to help consumers resolve issues with their financial service providers. 

While we’ve made significant progress, as financial services and technologies evolve, so do consumer risks, and these newer risks are not well understood. So, our work continues: IPA is launching a four-year, $7.8M extension of the Consumer Protection Research Initiative, redoubling our efforts to work with government and private sector partners to monitor for emerging risks and test solutions to address these challenges. 

In the last few weeks, we’ve brought together leaders from government, academia, and policy organizations across 16 countries—including eight government bodies and 14 non-governmental organizations—to define a new research agenda as we begin the second phase of our initiative. This agenda aims to address not just today’s issues, but issues that will be of increasing concern over the next four years. Here are a few key insights from attendees at two of our recent events: our “Consumer Protection Innovation Exchange” held in Nairobi and a virtual convening of experts with an interest in the intersection of consumer protection and gender. 

1. The bad guys are already harnessing AI to make fraud harder to detect and prevent. But AI can be used for good, too. Machine learning models can help identify unusual transaction patterns in real time, stopping suspicious activity before it escalates into a significant loss. Chatbots, powered by large language models (LLMs) such as ChatGPT, can quickly respond to consumer queries, providing instant, tailored advice or warnings about potential fraud (but LLMs also make mistakes, and we should be wary of ceding the complaints resolution process fully to them). 

2. Women and men likely face differential harm from exposure to consumer protection risks. But, little has been done to rigorously measure how these harms differ, and how tools to mitigate risks can be designed to meet the needs of women. As a starting point, we’re committing to release gender-disaggregated results for all future studies the initiative funds. There’s also much to be learned about how to make products work for women. For example, women typically repay loans at higher rates than men, indicating that credit scoring algorithms are more conservative in making credit decisions for women than men. Changes to credit scoring practices may help. 

3. Information sharing is essential for effective consumer protection. This sharing happens at many levels. Cross-country learning helps identify best practices, innovative solutions, and broad trends in emerging risks. Integrating multiple data sources provides a complete picture of market risks for regulators. And sharing insights between providers improves understanding of individual consumer risk profiles. 

In the coming months, we plan to share more about the research areas we believe are of the highest priority and launch another call for proposals for researchers and practitioners interested in working together to understand and address these challenges. Later in 2025, we’ll also be launching an expanded version of our Consumer Protection in Digital Finance Surveys, this time covering 10 countries: Bangladesh, Ethiopia, India, Indonesia, Kenya, Nigeria, Pakistan, Philippines, Tanzania, and Uganda. We’re also building an expansion of the price tracking work we started as part of the Transaction Cost Index. Starting next year, you’ll have access to monthly data on digital financial service prices from leading providers across 18 countries. 

If you’re interested in learning more about our work and opportunities for funding, sign up for IPA’s Consumer Protection newsletter!