Practice

Fraud Liability

Scheme rules must ensure that end users are not liable for confirmed fraudulent payments. This includes fraudulent payments resulting from Authorized Push Payment Fraud (initiated by the legitimate account owner, who has been manipulated or scammed to send the payment that she believed was legitimate) or Unauthorized Push Payment Fraud (initiated by an unauthorized end user who may have taken over the account of a legitimate end user or otherwise obtained and used the legitimate account owner’s information to send a fraudulent payment).

Safe Payments

Scheme ensures that users can conduct their transactions safely

Review Principle

How to Implement

Guidance

Implement clear regulations on Authorized Push Payment (APP) Fraud.

Regulations provide clarity that the end user is not to be held responsible for financial loss due to confirmed fraudulent payments (in cases where the end user is not complicit in the fraud). This is also important for Fraud Rules.

Reinforce APP regulations through Scheme rules.

The Scheme rules reinforce laws and regulations and consider payments that have been authorized as a result of social engineering, in which the legitimate end user is not complicit, to be fraudulent and that the end user is not liable. 

Take actions to investigate if fraud occurred.

DFSPs implement and consistently apply methods to investigate and determine whether a payment flagged by internal fraud monitoring systems or an end user as potentially fraudulent is confirmed as fraudulent. Once confirmed as fraudulent, DFSPs should follow relevant regulations and Scheme rules to support swift funds refunds for defrauded end users. 

Why It Matters

This ensures that DFSPs motivations and incentives to mitigate fraud risk are aligned.

Seeing More Clearly

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Women’s Inclusion

Women, who have higher vulnerability to and face more severe consequences of loss of funds in instances of fraud – a result of their lower literacy and higher financial constraints – benefit from clear rules and regulations that do not punish them for others’ fraudulent activities.

Fraud Mitigation

The experience of fraud and any associated loss of funds can have a severely negative and immediate impact on low-income women end users, including the inability to have sufficient funds for basic daily needs. The occurrence of fraud may also lead to a loss of trust in DFSPs. Clear laws and regulations on who is and is not responsible for APP fraud ensure that DFSPs’ motivations and incentives to mitigate fraud risk are aligned.

A woman purchases a necklace using mobile money in Rwanda.

Related Resources

From the Community

Helpful resources from other organizations on implementing this practice.

    Blog | CGAP

    Break the Bias: Evidence Shows Digital Finance Risks Hit Women Hardest

    Blog post describing how women are affected by fraud, data misuse, and inadequate redress, as well as how ecosystem participants can address these issues

    View

    PDF | Women’s World Banking

    The Case for Gender-Intentional Consumer Protection

    Policy brief describing why and how to design consumer financial protection mechanisms with women in mind

    View

    PDF | CGAP

    The Evolution of the Nature and Scale of DFS Consumer Risks: A Review of Evidence

    Holistic summary of emerging risks in digital financial services 

    View

    PDF | CGAP

    Making Data Work for the Poor: New Approaches to Data Protection and Privacy

    Report outlining recommendations for data protection for low-income consumers

    View

    PDF | Cherie Blair Foundation

    Empowered or Undermined? Women Entrepreneurs & the Digital Economy

    Report on the state of women’s entrepreneurship in low- and middle-income countries, with sections on gender-based violence

    View

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A woman uses mobile money to purchase fruit at a market in Rwanda.