NextBillion - A WDI Publication

Rising rates of financial fraud in emerging economies threaten to undermine the promise of digitization and the economic gains it unlocks. But for women entrepreneurs, digital tools are vital to the survival of their businesses. Without them, they face fewer markets and limited access to formal financial institutions, which translates into fewer sales and less growth. Yet navigating these ever-changing threats requires them to run a constant risk calculation every time they accept an online order or make a digital payment.

So how big an impact is this challenge having on women entrepreneurs, and what can be done to address it?

We already know that fraud is among the well-documented barriers women face when accessing digital financial tools and services. What’s missing is data on the unique risks women experience once they have already gained access to formal financial services or adopted digital tools — particularly in terms of their exposure and response to digital financial fraud, and their ability to recover from it.

Both CARE and Innovations for Poverty Action (IPA) have recently collected more data on this issue, via the Midline Survey from Strive Women, a Mastercard Strive program implemented by CARE, and from IPA’s Financial Consumer Protection Surveys. We combined our datasets to answer a few questions: Is there a specific story for women around digital risk and fraud? Are they more vulnerable? And what can we do to improve their resilience?

Are women more likely to be victims of fraud?

IPA’s surveys from seven countries find that women, on average, report fraud attempts 6 percentage points less often than men. But this gap shrinks once you account for differences in education, country, employment and financial literacy — factors closely tied to digital and financial platform usage. In other words, once you compare women and men with similar levels of education, employment and financial literacy, they report fraud attempts at about the same rate. Women aren’t exposed to fraud less because they’re women; they’re exposed less, in part, because they use formal digital and financial tools less regularly.

Similarly, data from the Strive Women program shows this pattern directly. Surveying over 1,000 entrepreneurs from Peru, Pakistan and Vietnam, it found that their reported rates of encountering fraud (attempted or successful) in the past 12 months are low (21% in Vietnam, 19% in Peru and 12% in Pakistan). A key determinant of fraud exposure is the entrepreneur’s country context and their usage of digital platforms: Entrepreneurs who used more digital tools for their business were more likely to experience fraud, regardless of gender. In other words, the very tools driving business growth are the same ones driving fraud exposure.

However, CGAP research shows that once contact from a fraudster happens, women are more likely to be affected by fraud: less equipped to identify a scam or resist social engineering tactics that exploit trust or urgency, and less supported by the systems meant to help when something goes wrong.

How does fraud affect women and men differently? 

Our findings reveal several areas where fraud has different effects on women and men.

Being prepared: Women may be slightly more attuned to digital risk than men. Data from Strive Women shows that 75% of women rate cybersecurity as important to their business, compared to 68% of men. But that added awareness doesn’t translate into more action: About a third of both women and men still take zero protective steps, and when entrepreneurs do act, they almost always default to the same single habit — a strong password — with far fewer using two-factor authentication, backing up their data or using antivirus software.

Knowing what to do next: Twice as many women as men in the Strive Women sample said they would not know what steps to take if their digital account were compromised, despite reporting high confidence using digital tools day-to-day. IPA’s data across several countries tells a more mixed story on formal complaints: Women were somewhat more likely than men to file complaints in Ethiopia and Pakistan (note: the data from these countries is not yet publicly available), roughly on par in the Philippines and Kenya, and less likely in Tanzania, Bangladesh and Uganda, where the gap reached about 17 percentage points. This spread suggests that the broader cultural contexts and financial systems women are navigating may affect their ability to seek help. Evidence from India points to one manifestation of this challenge: Women are more likely to turn to family or friends before pursuing a formal complaint, and fear of family backlash can discourage them from going further on their own — meaning the decision to seek redress is often a social one, not just a practical one. And even when a woman does clear that hurdle, the system doesn’t always meet her halfway. As one Strive Women entrepreneur in Peru put it: “There was money taken from my card. I went to the bank. They told me I had made that withdrawal, but I had not.”

Bouncing back: The Strive Women sample shows that men also have a larger financial runway to cope with a shock or emergency: 22% of men have enough capital to run their business for six months or more if something goes wrong, compared to only 14% of women. Without that cushion, a single fraud event threatens the sustainability of their business. IPA data also finds that women across the surveyed countries are 8 percentage points less likely to have capital reserves than men.

What actually helps women avoid fraud

Consumer education can help women detect and avoid fraud, depending on how it is designed and delivered, but education alone can’t solve the problem. In rigorous evaluations of fraud education programs in Kenya and Nigeria, IPA found that standalone tip sheets and training increased women’s confidence in recognizing fraud, bringing it closer to men’s. However, these initiatives did not similarly improve women’s ability to accurately identify fraudulent messages. In other words, participants felt more able to spot fraud but were not measurably better at it.

The exception was a program in Uganda that used interactive, story-based lessons built around realistic fraud scenarios. Users navigated common scams by making decisions at key moments, allowing them to practice how to respond before encountering fraud in real life. The program reduced the share of users who lost money to fraud by 1.4 percentage points overall and by 2.6 percentage points among women. Beyond training, a well-timed nudge or notification at the right point in a user’s digital journey can build awareness just as effectively. Better still is to build security into the product itself, so that safety doesn’t hinge on a behavior change — e.g., through default protections like automatic multi-factor authentication, transaction alerts, safer onboarding and role-based account permissions.

Redress mechanisms also need to be offered through channels women already trust. Many women still prefer an in-person agent to a chatbot, and routing support through community structures such as women’s groups and peer networks can reduce the stigma that keeps fraud victims from reporting. Peer networks and endorsements can also support women’s financial safety. In Ghana, an IPA evaluation found that training group leaders in mobile banking and encouraging peer endorsement were especially effective at building women’s confidence to handle fraud. IPA research also finds that offering free, easy-to-access legal aid can increase redress resolution rates for women slightly more than men.

But in many cases, providers do not need new programs or policies: They just need to make better use of the data they already collect. IPA’s work with a Ugandan telecom regulator found that categorizing and segmenting existing complaint data by sex could reveal where to focus next in fraud prevention policy.

Let’s stop treating digital safety as an afterthought 

Women entrepreneurs do not need to be persuaded to use digital tools. They already are. But if we want them to continue reaping the benefits of digitization, what they need are systems that make those tools safe.

That means moving beyond consumer education as the primary line of defense. Instead, providers should embed protections into products from the outset through secure defaults, clear transaction alerts, intuitive reporting channels, and recovery mechanisms that are free and easy to navigate. Regulators should require providers to collect and analyze sex-disaggregated fraud and complaints data, and set institutional standards for delivering effective consumer protection — not just access — across genders.

The success of digital financial inclusion should no longer be measured only by how many women adopt digital tools, but by whether they can use those tools safely, with confidence — and whether they have the ability to recover when something goes wrong.

For more information about the research in this article, contact us by email at financialinclusion@poverty-action.org and entrepreneurship@care.org.

Tanvi Jaluka is the Research and Learning Lead for CARE USA’s Women’s Entrepreneurship team; Lauren Perlik is an Associate Program Manager for Innovations for Poverty Action’s Financial Inclusion Program.

Photo credit: AndreyPopov