Consumers must be protected from MFS fraud

While mobile financial services (MFS) are becoming increasingly popular among our population, a large number of clients are being discouraged from using the services because of various types of fraudulent activities. A survey conducted by the Policy Research Institute of Bangladesh (PRI) found that about one in 10 users have been victims of MFS fraud. The PRI surveyed 7,279 MFS users from 45 districts and 2,000 agents from 13 districts and identified some of the ways in which such frauds take place on this platform. While in many cases, the users' PINs are compromised, in other cases, the scams involve impersonation; sometimes the users' accounts are compromised altogether.

What happens after the users fall victim to such fraudulent activities is, a majority of them discontinue using mobile financial services. This is because when they complain to the authorities of such occurrences, the latter often fail to take proper action. The PRI study found a strong link between the time required to address the victims' complaints and their decision to continue to use MFS—while 95 percent of the fraud victims who had their complaints solved in a day continued to use MFS, around 30 percent of the victims abandoned the platform for good because their complaints were not addressed.

The situation is concerning because if the users lose their confidence in these services, it will be difficult to expand the MFS market in the country, which has huge potential. Currently, 55 percent of our population uses MFS, and if we want to increase their number and go towards at least 85 percent coverage, there is no other way but to address the fraud issue.

So, how do we do that? Experts suggest that before financial inclusion, consumers need digital and financial literacy as the incidence of fraud is relatively higher among the less educated users and untrained agents. Therefore, steps need to be taken by the government and the private sector to educate the people about the basic uses of the MFS. Providing training to all the agents is no less important.

Last but not the least, the consumers must be protected from any kinds of fraudulent activities at all costs. There need to be effective complaints recourse channels with trained staff who are efficient in handling fraud and other complaints and dedicated recourse channels for agents.