Financial Frauds on Payment Cards: The Role of Financial Literacy and Financial Education

Nicolini Gianni () and Leonelli Lucia ()
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Nicolini Gianni: Associate Professor of Finance, Department of Management and Law (DML); University of Rome “Tor Vergata” (Rome, Italy); Via Columbia 2, 00133 Rome (Italy)
Leonelli Lucia: Associate Professor of Finance, Department of Management and Law (DML); University of Rome “Tor Vergata” (Rome, Italy); Via Columbia 2, 00133 Rome (Italy)

International Review of Financial Consumers, 2021, vol. 6, issue 1, 1-33

Abstract: The growing number of payment cards issued around the world, and the growing number of transactions generated by those cards (even thanks to the e-commerce trend) have seen an increase in the relevance of financial frauds based on the use of payment cards. Negative consequences from payment card frauds do not affect only the card users, but involve sellers, financial intermediaries, and other players in the payments system. The aims of this study are (1) to assess how financial literacy can help individuals to identify and avoid financial frauds related to the use of payment cards, and (2) to assess the effectiveness of a one-shot financial education seminar to increase the ability to identify and avoid a financial scam (“fraud literacy”). Data from a sample of college students was collected in 2019 and used to address both research questions. Results support the hypothesis that financial literacy can help financial consumers to avoid being a victim of a financial fraud, even if further analysis are required. Additional results show how financial literacy is related to financial confidence, with a risk of a potential “over-confidence” effect. Results from a diff-in-diff estimation suggest that a single seminar does not improve the ability to detect financial frauds.

Keywords: Payment cards; Credit cards; Debit Cards; Financial Literacy; Financial Education; Financial Frauds; Financial Scams; Over-confidence (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:irfinc:v:6:y:2021:i:1:p:1-33:n:1001

DOI: 10.36544/irfc.2021.6-1.1

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