Page 16 - ITU-T Focus Group Digital Financial Services – Consumer Experience and Protection

ITU-T Focus Group Digital Financial Services
Consumer Experience and Protection

b) false transactions – agents transfer a consumers funds to their own account

c) registration fraud – creating false accounts for the purpose of obtaining extra registration commissions
d) overcharging – agents charging unauthorised or incorrect fees
3 Internal – fraud which may be committed by an internal employee

a) internal fraud – employees colluding for unfair personal gain
b) identity theft – employees accessing and exploiting customer information without authorisation
Examples of when fraud has occurred include lottery scams in Bangladesh where users were told they must
send a fee in order to gain access to their winnings. In Uganda cases of reversal requests were reported
where SMS requests were sent to users informing them that funds had been incorrectly deposited in their
account and that they should return them (McKee, Kaffenberger, & Zimmerman, 2015). While the occurrence
of fraudulent activity is relatively low the perception of the threat of fraud is high. The key issues for fraud
prevention are described below:

Table 3: Fraud prevention issues
Key issues Examples

1. DFS PROVIDERS ARE LICENSED DFS can only be provided by licensed entities (banks and non-banks) and are
AND SUPERVISED UNDER A REGU- regulated by the financial regulator. The DFS provider is required to adhere to
LATORY FRAMEWORK the licensing requirements at all time.
2. REGULAR NETWORK TESTING, To prevent and detect fraud there should be ongoing checks to ensure that
REAL-TIME MONITORING AND information systems and applications are working correctly.
ONGOING CHECKS FOR SECURITY
SYSTEMS AND PROCESSES
3. DUE DILIGENCE TO BE CON- Due diligence is carried out on all staff (employees, contractors, agent etc.)
DUCTED ON STAFF AND AGENTS prior to hiring.

4. PROVIDERS ARE RESPONSIBLE Providers are responsible for the conduct of their agents, ensuring providers
FOR THEIR AGENTS effectively manage and train their agents.

5. AGENT MONITORING To ensure that agents comply with regulations and guidelines their activities
are monitored by providers. This may be done through onsite checks or mys-
tery shopping. Clear sanctions are in place for agents who are found to be not
complying.
6. AGENT TRAINING Providers ensure agents are trained to a high standard to reduce the chance of
errors occurring and to be able to offer knowledgeable support to consumers.
Ideally training should be compulsory and ongoing.

7. TRANSACTIONS OCCUR IN REAL When the network is down, consumers sometimes leave money with agents to
TIME carry out the transaction later. This can leave customers open to agent fraud,
if the agent instead keeps the money. Real time transactions would cut down
on this type of fraud, though in many geographical areas real time transactions
are still challenging in practice.
8. CONSUMERS ARE ENCOURAGED Consumers are aware of and understand the process to report suspected inci-
TO REPORT FRAUDULENT ACTIVITY dences of fraud to their provider or to financial and telecom regulators.
9. CONSUMER AWARENESS CAM- Consumers are informed of the common types of frauds prevalent in the
PAIGNS ON THE COMMON TYPES market through various channels (such as SMS alerts, radio announcements,
OF FRAUD signage at agent location etc.).

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