The project, announced Thursday (Dec. 7) and part of the Mastercard Center for Inclusive Growth, is designed to bring together digital financial service providers, regulatory bodies, consumer advocates and technology companies, to address the growing complexity of the digital finance ecosystem.
“Consumer advocates worldwide share that only 20% of consumers are included in deliberations about design of new technologies in their country,” Mastercard said in a news release. “This lack of voice means that risks for vulnerable consumers in digital finance are not effectively addressed or anticipated, and solutions are not effectively designed for the people they are intended for.”
According to the release, a grant from the Mastercard Center, through the Mastercard Impact Fund, will accelerate research and development of a global consumer protection framework, with an emphasis on underserved populations.
The program will center around up to a dozen countries, “based on representative digital finance ecosystems and consumer advocacy presence,” with the goal of promoting trusted digital experiences beyond just ensuring access to quality services, the release said.
“Consumer protection frameworks and systems have simply not kept up with these surging levels of complexity,” said Helena Leurent, director general of Consumers International.
“They no longer work to inform, protect, and empower consumers effectively. As a result, consumers are subject to significantly increased risks such as fraud and scams, which then reduce consumer trust and stall progress. This is particularly the case for lower income consumers, women, and other consumers with systemic vulnerabilities,” Leurent added.
The Federal Trade Commission (FTC) reported earlier this year that consumers lost $8.8 billion last year to various fraud schemes, an alarming 30% increase over the prior year’s tally. Most of those ill-gotten games came from investment scams, which more than doubled between 2021 and 2022.
Meanwhile, imposter scams racked up $2.6 billion in 2022, about $200 million more than the $2.4 billion the FTC measured for imposter scams in 2021.
Beyond fraud protection, research by PYMNTS from earlier this year has found that proper financial education can improve people’s monetary situation.
“For consumers with deep subprime credit scores (scores of 579 or less), there is an opportunity to improve their credit scores to the near-prime range of 620 to 659,” that report said. “This improvement could have substantial benefits, allowing them to finance an additional $44,000 in purchases and reduce their interest rates by up to 24%, per our research.”