Page 7 - Unlicensed Digital Investment Schemes (UDIS)
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Executive Summary
nternet fraud in the form of unlicensed digital investment schemes (aka digital Ponzis) is at
an all-time high. Yet, the impact on financial exclusion is unknown, because few regulators
Ihave been measuring the magnitude of the problem. Judging from past Ponzi statistics in the
pre-digital era, however, we know that this type of financial fraud can severely harm individual con-
sumers and their families and cause financial system risk, which may induce civil unrest.
This paper aims at providing a better understanding of the impact of this specific type of fraud
on both the consumer and financial exclusion through an analysis of unlicensed digital investment
schemes and the legal/regulatory frameworks in which they thrive in India, Kenya and Nigeria. It
also proposes new means to address a digital mutation of a very old problem, and makes con-
crete recommendations regarding the use of new technologies and new partnerships, including
the involvement of the telecommunications regulator to take up the unlicensed digital investment
schemes challenge.
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