Navigating the Rise in Non-Institutional Digital Fraud: An Experiment with Micro Enterprises in Nigeria

Michael King (), Daniel Putman, Shane Byrne () and Chaning Jang ()
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Michael King: Department of Economics, Trinity College Dublin
Shane Byrne: Department of Economics, Trinity College Dublin
Chaning Jang: Busara Center for Behavioral Economics

No tep1124, Economic Papers from Trinity College Dublin, Economics Department

Abstract: The high prevalence of digital financial fraud stresses businesses' ability to distinguish between real communications from digital financial service (DFS) providers and fraudulent impersonations. Besides the financial and psychological costs to businesses, fraud may erode trust in, and usage of DFS. We test two strategies for preventing non-institutional fraud: a series of anti-fraud learning interventions and a technical solution to authenticate inbound communications from a digital platform. Using a pre-registered behavioural laboratory experiment in Nigeria, we find evidence that timely educational interventions increased trust in DFS, its likely future usage, and improved knowledge about fraud four weeks post intervention. However, when we task micro business owners with evaluating the authenticity of a series of fictionalised scenarios, we do not find evidence of improvement in fraud detection, either overall, or when considering only genuine or fraudulent scenarios. Surprisingly, we find increased self-confidence in fraud detection ability, highlighting the risk of overconfidence.

Keywords: Financial Behavior; Digital Finance; Fraud; Trust; Consumer Protection; Financial Inclusion; Financial Development (search for similar items in EconPapers)
JEL-codes: D18 G41 G53 O12 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2024-11, Revised 2025-01
New Economics Papers: this item is included in nep-exp and nep-pay
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