IN RECENT years, financial scams have alarmingly surged in Bangladesh, targeting people from all socio-economic backgrounds. These fraudulent schemes impact individual victims and cast a shadow on the broader economy by eroding trust in financial institutions, appropriating resources, and shaking public confidence in the regulatory system. As scammers exploit cultural, psychological, and systemic vulnerabilities, an urgent and comprehensive approach is imperative to combat these issues effectively.
One of the primary reasons scams became rampant in Bangladesh is the societal obsession with quick financial success. In the local culture, economic status is closely linked to social standing. This cultural obsession with wealth drives many individuals to seek rapid financial gains, often without fully understanding the risks involved. In a country with limited socio-economic mobility, the desire to improve one鈥檚 economic position makes people prey to get-rich-quick schemes that promise unrealistic returns.
The cases of companies such as Destiny 2000 and Evaly are striking examples of how scams manipulate this cultural mindset. Both companies lured customers and investors with promises of high returns on investments. However, these were unsustainable business models based on Ponzi schemes. Evaly, for instance, attracted thousands of customers by offering heavily discounted products and promising quick delivery. However, many people soon realised that their money had disappeared, along with the company. Despite the education or background of the individuals involved, the allure of quick wealth closed their eyes to the risks.
To counter this, society must shift its focus from glorifying rapid financial success. Promoting financial literacy can be a powerful tool in reducing people鈥檚 susceptibility to scams. Education systems should integrate financial literacy programmes, starting early, to empower individuals to grasp the significance of making informed financial decisions. By teaching people to identify warning signs 鈥� such as unrealistic returns, pressure to invest quickly, or lack of transparency 鈥� individuals can take charge of their financial security and shield themselves from falling prey to fraud.
Another factor contributing to the prevalence of scams in Bangladesh is the widespread mistrust of formal financial institutions. This distrust, particularly among rural populations and lower-income groups, stems from historical corruption scandals and inefficiencies within the banking sector. Many individuals perceive formal financial institutions as unreliable or inaccessible, leading them to alternative financial schemes that promise better returns. Unfortunately, these alternative schemes often turn out to be fraudulent.
Rebuilding public trust in formal financial institutions is a pivotal step in reducing the allure of scams. The government, banks, and other financial organisations must strive to restore confidence by operating with utmost transparency and efficiency. Financial institutions should engage directly with communities, mainly rural areas, to provide greater access to reliable and user-friendly banking services. One potential solution is for banks to develop outreach programmes to educate the public about safe investment practices and elucidate the benefits of regulated financial services. By enhancing the accessibility and reliability of these institutions, fewer individuals will be enticed to participate in risky, unregulated schemes, fostering a sense of security in the public.
Cognitive biases also play a significant role in the persistence of scams. Human decision-making is often influenced by biases such as confirmation bias and optimism bias. Confirmation bias leads individuals to seek information that supports their beliefs while ignoring contradictory evidence. For example, someone invested in a dubious scheme may focus on success stories shared by other investors and downplay the risks, even in the face of warning signs. Similarly, optimism bias causes individuals to believe they are less likely than others to fall victim to fraud, assuming they have the foresight to avoid such traps.
Scammers exploit these psychological tendencies by crafting sophisticated marketing campaigns that appeal to emotions. They often present themselves as legitimate businesses, using flashy offices, celebrity endorsements, and social media influencers to build a fa莽ade of credibility. This carefully crafted image creates a 鈥榟erd mentality,鈥� where people feel reassured by the participation of others and become more willing to invest without fully understanding the risks. Evaly is a recent example of this phenomenon. By leveraging social media marketing and celebrity partnerships, the company created a false sense of legitimacy that lured thousands of customers into its fraudulent scheme.
Public awareness campaigns are essential to combat the psychological manipulation used by scammers. These campaigns should educate people about common cognitive biases and how they can make individuals vulnerable to scams. In addition, the government could collaborate with psychologists and marketing experts to develop educational materials that help people recognise the emotional triggers used in fraudulent schemes.
In today鈥檚 digital age, scammers increasingly use technology to reach a wider audience. Social media platforms, mobile apps, and online advertisements provide scammers with an inexpensive and efficient way to promote their schemes to millions. The anonymity offered by these platforms makes it difficult for authorities to trace the perpetrators, allowing scams to spread rapidly before they can be detected.
The government should work closely with social media companies and digital platforms to address this issue and establish more robust safeguards against digital fraud. Platforms like Facebook, Instagram, and YouTube must implement more robust screening processes for advertisers, ensuring that fraudulent businesses are flagged and removed before they can reach a large audience. Additionally, technological solutions such as artificial intelligence and machine learning can be employed to detect suspicious patterns in online activity, enabling faster intervention.
The government could also introduce a streamlined reporting system that allows citizens to report potential scams easily. This system could include a mobile app or a hotline where individuals can anonymously submit information about fraudulent activities. Such an initiative would provide authorities with real-time data, enabling them to act more swiftly to prevent the spread of scams and underscore the general public鈥檚 collective responsibility in combating fraud.
One significant reason scams can thrive in Bangladesh is the systemic weakness in regulation and governance. Agencies such as the Anti-Corruption Commission and the Bangladesh Financial Intelligence Unit are responsible for combating financial fraud. However, these agencies often operate reactively, only intervening after a scam has defrauded thousands of people. By this time, scammers have frequently disappeared or moved their assets beyond the reach of the law, making it difficult to recover losses or bring them to justice.
It is essential to shift from a reactive to a proactive approach to strengthen regulatory efforts. Regulatory bodies must be empowered with the resources and authority to monitor and investigate potential scams before they escalate. This could involve creating specialised task forces dedicated to identifying and addressing emerging threats in the financial and digital landscapes. The legal system also needs reform. Introducing fast-track courts for scam-related cases could ensure justice is delivered more efficiently. Additionally, laws governing financial crimes must be updated to account for the rapidly evolving nature of digital fraud. For example, regulations should require greater transparency and accountability from companies that solicit investments through online platforms.
Combating scams in Bangladesh requires a coordinated, multi-dimensional approach that addresses the cultural, psychological, and systemic factors enabling them to thrive. First, financial literacy programs must be implemented to help individuals recognise and avoid fraudulent schemes. Second, public trust in formal financial institutions must be rebuilt through transparent and community-oriented engagement. Third, awareness campaigns must educate citizens about scammers鈥� psychological manipulation techniques. Fourth, technological solutions should be leveraged to detect and prevent digital fraud. Finally, regulatory and legal reforms are necessary to ensure that scams are detected early and dealt with swiftly. By working together 鈥� across government, financial institutions, technology platforms, and educational systems 鈥擝angladesh can create a safer financial environment that empowers its citizens to make informed decisions and protects them from falling victim to scams.
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Dr Mohammad Shahidul Islam is an assistant professor of marketing at the BRAC University.
