In Bangladesh, one in every 10 mobile financial service (MFS) users has faced financial fraud. A survey by the Policy Research Institute of Bangladesh (PRI) revealed the truth that pulls the success of MFS at stake. Compromised PINs and scams involving impersonation are primary frauds experienced by MFS users. The average size of the financial loss from using MFS accounts amounted to over Tk 9,000.
The digital financial sector, specifically MFS, has seen significant growth, propelling us towards a cashless society, while having a major socio-economic impact on both formal and informal as well as urban and rural demographic. However, to safeguard this sector, its consumers need to be protected to retain the market growth. Financial fraud in MFS has also become endemic around the world, with considerable investment being warranted to ensure that e-commerce is a boon to society as living standards rise rather than becoming a digital quagmire for national governments.
Two-thirds of the complaints were resolved within a week, while one-third were never resolved. Approximately 56 per cent of the MFS users who faced fraud noted that their complaints were resolved satisfactorily. Findings also showed that users with higher financial losses had their problems resolved within the first week of complaining. The propensity of fraud across agents is substantially higher in urban areas. The average size of financial losses suffered by agents from operating MFS accounts amounted to over Tk 18,000, with a maximum loss recorded at Tk 70,000.
The threat to consumers is not going to go away, despite the literacy rate increasing or the market maturing, and hence a safeguarding mechanism or an ecosystem needs to be enabled. In regards to that, the central bank needs to open a single wing under it that monitors the sector empirically to strengthen consumer safety, instead of the task being allocated to three different wings of the central bank- as it’s highly inefficient.
More investment is also required in the recruitment, training and management of agents for the successful deployment of MFS in both rural and urban regions. Banks have equal responsibility in addressing frauds and scams and should not hold the financial service provider or operator liable for returning the money to the consumer as banks themselves are the settlement account holders.
