Should Businesses Use Document Verification to Verify Identities Online?

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document verification

Identity theft is a growing problem for consumers, businesses, and governments. Recent statistics show that identity theft resulted in over $26 billion in losses in the U.S. last year. As businesses and organizations look for reliable ways to fight fraud, especially with data breaches on the rise, one method that has gained in popularity is using identity document verification to confirm people’s identities.

Document verification allows your potential customers to verify their details over the Internet, rather than in-store, in-branch or in-person. It enables your company to meet statutory obligations, including Anti-Money Laundering and Counter-Terrorism Financing, known as AML/CTF.

How does document verification work for identity checks?

A customer whose identity is being verified first holds up their identity document to a web or smartphone camera to scan the relevant information. Once the image has been received, it is then examined by software to verify the document’s authenticity. In some cases, the image is also manually examined by document experts who can detect forgeries. An additional option available is for the person to provide a live image capture of their face for matching against the photo on the document. Finally, the result is either a verified or a non-verified identity.

What are the pros and cons of using documentation verification to verify identities?

Ease of use

With current documentation verification services, verifying someone’s identity can be as simple as providing a digital image of an identity document such as a driver’s license or passport. This can be done in person using a web camera or even remotely by sending a photo taken using a smartphone.

Faster turnaround times
Instead of having to submit copies of identity documents by mail or in person and having to wait for someone to physically verify their authenticity, document verification services can immediately check a document submitted electronically.

Not always reliable

While document verification is a powerful tool for fraud prevention, it is not foolproof. With continued improvements in technology and document forgery techniques, criminals are more successful than before in fooling even experienced border control staff. Identity document verification only confirms whether or a not a document is legitimate.

Identity information not checked
Because document verification only checks for authenticity of the document itself, important identity information, such as the person’s full name, home address, and date of birth, are not verified. Without verifying this important information, there is the possibility that someone with a fake ID could still pass identity verification that uses only document verification.

As we can see, document verification has its merits, but it is not enough to depend on it as the only method to verify identities. In countries such as the United Kingdom, Australia, and New Zealand, the rules are clear that more than one independent source must be used in order to ensure that an identity has been reliably verified. Using multiple sources can help prevent fraudsters who have stolen one set of credentials from completing their transaction. For best results, implementing a multi-layered approach offers the highest level of identity proofing for online transactions.

What’s the difference between identity verification and identity authentication?

Identity Verification
This step is commonly recognized by most consumers, as it is the traditional means of proving someone’s identity. Identity verification can take place either by physically presenting a driver’s license or entering personal information such as name, address, and Social Security Number on an online application form. The credentials are then visually verified when presented in person or checked against a reliable data source when presented online.

For many years, this method on its own has been trusted and generally successfully on its own for preventing fraud. However, today’s fraudsters have access to affordable technology that can easily create fake identity documents that look very authentic. Also, data breaches have made it easy for criminals to steal protected personal information and trick anti-fraud systems.

Identity Authentication
For online transactions, identity authentication can be effective in preventing fraud. In addition to providing the usual information necessary for identity verification, knowledge-based authentication (KBA) is often used, typically in the form of questions that only the real person should know the answers to. These are often called out-of-wallet questions, since they require information that cannot be found on an identity document. Some examples include names of family members, past employers or home addresses, or information about a past loan payment.

Even though this additional layer provides greater protection for consumers and businesses, it is also becoming more vulnerable to identity thieves, as in the case of the IRS data breach earlier this year.

When it comes to finding the best solution for protecting against identity fraud, it pays to look at implementing a combination of systems rather than only one. Electronic identity verification products with access to multiple reliable data sources, including credit header and utility data, make an ideal complement to document verification and other methods of verifying identities.

How does your business protect against identity fraud and financial crime?

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