Working Paper: CEPR ID: DP17836
Authors: Elif Kubilay; Eva Raiber; Lisa Spantig; Jana Cahlkov; Lucy Kaaria
Abstract: The recent expansion of digital financial products leads to severe consumer protection issues such as fraud and scams. As these potentially decrease trust in digital services, especially in developing countries, avoiding victimization has become an important policy objective. In an online experiment, we first investigate how well individuals in Kenya identify phone scams using a novel measure of scam identification ability. We then test the effectiveness of scam education, a commonly used approach by banks and institutions for fraud and scam prevention. We find that common tips on how to spot scams do not significantly improve individuals' scam identification ability, i.e., the distinction of scams from genuine messages. This null effect is driven by an increase in correctly identified scams and a decrease in correctly identified genuine messages. We interpret this as an increase in caution. In addition, we find suggestive evidence that genuine messages which contain scam-like features are more likely to be misclassified, highlighting the importance of a careful design of official communication.
Keywords: consumer protection; consumer fraud; digital financial services; scam susceptibility; scam education; kenya
JEL Codes: D14; D18; G53; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| scam education (tips) (I23) | scam identification ability (SIA) (D91) |
| scam education (tips) (I23) | confidence in classification decisions (D80) |
| confidence in classification decisions (D80) | scam identification ability (SIA) (D91) |
| scam education (tips) (I23) | misclassification of genuine messages as scams (K24) |
| scam identification ability (SIA) (D91) | correctly identified scams (K24) |
| scam identification ability (SIA) (D91) | correctly identified genuine messages (Y50) |