IPA Consumer Protection Quarterly

What's new and what's next

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New: IPA tests two new tools to monitor complaints and redress in digital finance

Are you a customer hotline haranguer, or a social media screamer? Either way, we have you covered. IPA has completed our first two data analytics projects on complaints and redress in digital financial services (DFS), and we are thrilled to share how these new methods could expand our ability to track and address common issues that consumers experience in digital finance.

• In Uganda, IPA, the Uganda Communications Commission (UCC), and professor Matthew Bird have developed new methods to analyze telecommunications customer care records and demographic data to see who complains, who doesn’t, and what the key consumer protection issues are in products like mobile money and e-commerce. Learn more here.
• Meanwhile, Professors Melissa Tully and Dani Madrid-Morales have pored over a year’s worth of social media content in Kenya, Nigeria, and Uganda. Through millions of tweets, posts and ALL CAPS RANTS they have found a wealth of insights on the types of issues consumers bring to social media channels, and how these channels may offer a real-time solution to consumer protection monitoring and complaints handling. Learn more here.

Next: Customer surveys on consumer protection risks

IPA has developed a new, comprehensive consumer protection in digital finance survey, which is being used to set priorities for consumer protection policy in Kenya, Uganda, Nigeria, and Bangladesh. The data is already in for Kenya, Uganda, and Kaduna State, Nigeria. One of the most interesting takeaways from the surveys are how challenges consumers experience are similar or different across each market. As the graph shows, while agents commonly charge extra fees in Nigeria and Uganda, this practice appears to not be common in Kenya. By contrast, Kenyans seem to have much higher rates of sending money to the wrong person. Stay tuned in early 2021 for the full findings and analysis from these surveys.
 

New: Unpacking the black box of data protection and digital finance

December 9th was an exciting day for data privacy and financial inclusion. IPA hosted a lively discussion on “Building an ‘Ethical Matrix’ for Digital Finance: Beyond Black-Box Algorithms," which featured Cathy O’Neil (CEO of ORCAA and bestselling author of Weapons of Math Destruction), Jake Appel (Chief Strategist at ORCAA), and data protection and consumer finance expert Malavika Raghavan. The discussion focused in large part on the challenges of monitoring and setting standards for the ethical use of data in decision-making algorithms.

Cathy shared several real-world cases of bias and a new matrix which ORCAA has developed to monitor for bias in algorithms, while Jake presented the challenge of proxy variables and fairness. These variables may not directly cover a restricted category like race or gender, but could lead to bias against consumers by their association with those restricted categories. During her commentary, Malavika shared the experiences and challenges from India’s financial services industry in developing laws and supervisory tools in the public and private sector. This discussion made clear the need for solutions to integrate ethics into the predictive models that drive much of digital finance, and IPA hopes to support increased researcher engagement in this space.
 

Next: Consumer protection request for proposals

IPA will be releasing a request for proposals (RFP) for impact evaluation studies on consumer protection in January 2021. We are looking for proposals to test new solutions to consumer protection challenges like fraud, complaints handling, and transparency in emerging markets. We highly encourage all researchers, financial service providers, government and civil society to apply. IPA staff will be hosting information sessions for the RFP and we encourage any interested applicants or those looking for a connection to a research partner to contact [email protected].

Things that make us think

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A few links to recent research that are sparking excitement on our team:

1. An intervention with loan officers in Chile by Montoya, Parrado, Solís, and Undurraga found that not only did loan officers discriminate against women, but providing them with information on female repayment rates being higher than men's was not effective in removing this bias.
2. Extra charges from agents can be quite common—as our survey data in Nigeria and Uganda suggests. In Ghana, Francis Annan has found that female customers are more commonly charged these extra fees. But new evidence from Bangladesh by Breza, Kanz, and Klapper found that users of digital accounts could over time learn to avoid these fees. We look forward to more data on this practice from across markets so we can develop solutions to remove this extra cost to consumers.
3. Could a little bit of friction in digital lending be a good thing after all? In Mexico, Burlando, Kuhn, and Prina found that slowing down the disbursement of a digital loan from 10 to 24 hours reduced default rates by 20%.

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