Consumers International

04/16/2024 | Press release | Distributed by Public on 04/16/2024 11:53

Consumers international launches global campaign for transparent digital finance

Consumers international launches global campaign for transparent digital finance

16 April 2024

Billions of consumers around the world use digital finance services. Payments are made in a matter of moments. Emergency loans taken out in just a few clicks. And millions of people - formerly unbanked - are interacting with financial institutions for the first time via mobile money.

The digitalisation of traditional financial services presents a unique chance to build better services for consumers. Seizing this opportunity will result in greater resilience for individuals and communities and better outcomes for consumers.

At present, this opportunity is being missed - especially when it comes to transparency. Our Members around the world are increasingly concerned that opaque, misleading and inaccessible information in digital finance is causing harm to consumers.

Today , we launch a global campaign for transparent digital finance for consumers. This has begun with an alliance of 25+ digital finance experts (and counting), who call for urgent action to improve consumer understanding and trust in digital finance services through greater transparency.

Consumers need relevant, timely, and inclusive information to make informed decisions and be better protected from harm.

Our call is to all actors in the digital finance ecosystem to take urgent action to improve consumer understanding and trust, through greater transparency and accountability. Each must play their part to review existing transparency practices, set goals and deliver innovative solutions that will reduce harm and unlock potential benefits of digital finance for all consumers.

Contact [email protected] to to join our call.

The problem: Opaque, misleading and inaccessible information.

Poor transparency is a persistent problem in financial services - and is being exacerbated by digitalisation. Part of this is due to the nature of new digital interfaces - it's hard to read lengthy terms and conditions on a tiny phone screen. But in some cases, this is by design. Key terms and important facts are buried beneath multiple clicks, confusing payment terms hide heavy charges, and deceptive website design nudge' consumers towards more expensive services, or 'steer' them away from options to cancel or complain.

How does poor transparency lead to harm?

Our statement draws a direct link between opaque, misleading, and inaccessible information in digital finance - and harms faced by consumers.

For example, low fees can be used to hide poor exchange rates. This can have a significant impact on those with tight budgets - and there are rarely routes to redress for those affected. In 2021, consumers and businesses worldwide lost $187 billion to hidden fees on exchange rates when making cross-border transactions.

Elsewhere, a lack of transparency can mean that consumers are unwillingly or unknowingly signing away their personal data for unethical use. In some cases, sensitive financial information is handed over to aggressive marketers who use predatory and even abusive tactics to exploit consumers.

More broadly, a lack of transparency is a primary contributor to the widespread lack of trust in digital finance. This holds us back from building consumer confidence and unlocking the full benefits of digital finance.

In 2023, 57% of consumer bodies cited 'lack of transparency in fees and charges' as a significant factor causing lack of trust.

Our campaign: A call to all digital finance actors

We call actors in the digital finance ecosystem to take urgent action to improve consumer understanding and trust, through greater transparency and accountability.

What do we mean by 'transparency'? Our statement explains that transparency means more than full disclosure. Transparency means that digital finance providers aim to be genuinely helpful for the consumer. They provide information that enables them to make the most informed decision for their financial lives.

We define transparency as providing information to consumers in a way that is complete, timely and inclusive. This means honest, accurate information, provided to the consumer when they need it, and presented in a way they can understand.

Digital finance providers must take responsibility for making this available for consumers. And all actors - regulators, civil society, consumer bodies, and more, must play their part to review existing transparency practices, set goals and deliver innovative solutions that will reduce harm and unlock potential benefits of digital finance for all consumers.

Join us

So far, over 25 change-making organisations and institutions have joined our call to action.

If you are a government or regulatory body, consumer association, civil societyor intergovernmental organisation, committed to making transparency a reality in digital finance, join our alliance. Email [email protected]to become a signatory and receive our campaign materials.