This brief leverages research conducted by the Center for Financial Inclusion (CFI), surveying 4,000 Micro and Small Enterprises (MSEs) located in five metropolises — Delhi, Lagos, Addis Ababa, Jakarta, and São Paulo. The study focused on MSEs with less than ten employees operating in fixed locations, regardless of formality. MSEs of this size, despite their important role and contributions to the economy, tend to fall between the cracks since they are not individuals and often lack the formality, as well as the financial and legal depth of larger businesses.
The consequence is that consumer protection of MSEs is a topic that continues to be under-researched although it is beginning to emerge as a crucial area to address, especially if we are to enable long-term trust in digital financial services. Consumer protection challenges faced by MSEs and their owners have seldom been studied together, and this is an early attempt to highlight consumer protection gaps that should be closed. This brief classifies consumer protection challenges into five groups:
- Consumer protection and gender
- Frauds and scams
- Consumer recourse and grievance redressal
- Overindebtedness
- Consumer protection challenges due to poor connectivity
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