Online Age Verification: How to Prevent Sales to Minors Without Alienating Legitimate Customers
Whether you run an online gaming (gambling) service, or an online store selling eCigarettes, cannabis or alcohol online, conducting age verification is a legal requirement in jurisdictions that permit such online activities. Like identity verification procedures, age verification shouldn’t serve the purpose of regulatory compliance alone; it needs to be designed to deliver an optimal online experience that doesn’t hinder adults from enjoying their desired products and services.
Slow and cumbersome verification processes will test customers’ patience and drive them away. In that context, how can companies verify age online with confidence, while providing a quick and seamless onboarding experience?
The applicable age verification requirements may differ depending on the product and service being sold, along with the jurisdictions in which the business operates and in which orders are placed. Staying compliant therefore requires an understanding of the specific standards prescribed by local regulators. Age verification systems need to be robust, accurate, quick, and need to maintain an audit trail. Another consideration, especially for operators selling in multiple jurisdictions, is the system’s ability to customize age verification requirements to account for cross-border regulatory compliance.
For example, the legal age in some jurisdictions is 18, whereas, in other areas, it may be 19 or 21. Having automated procedures to account for such differences allows the age verification system to seamlessly onboard customers from multiple regions, without the tedium of creating a separate onboarding process for each and every jurisdiction.
Unlike services, age-restricted products are physically delivered to the customer. Relying on the delivery person to verify the customer’s age comes with inherent risks. Does the delivery person have expertise in identity and age verification? Can they be thorough in doing their due diligence on each and every customer that they deliver to? Is there a way to track the verification and authentication process? Can it be audited?
Consider online alcohol sales, a market which grew by 32.7 percent in 2017. In a recent sting operation in Texas, it came to light that over 20 percent of underage people were able to get alcohol by ordering it on an app. For legitimate operators, underage drinkers represent massive risks in the form of regulatory fines and lawsuits; there is also the risk of reputational damage should these oversights become public and attract the opprobrium of the society at large. It would also give detractors the ammunition to call for the creation of excessive requirements to police the sale of age-restricted products online, which could threaten the viability of the business model.
Another fast-growing market where age verification is generally a requirement is eCigarettes. The FDA does prohibit the sale of eCigarettes and other nicotine products to people under the age of 18. But according to the US Centers for Disease Control and Prevention (CDC), eCigarette use by high school students has jumped 78 percent from 2017 to 2018.
Unfortunately, according to a 2017 Internet Tobacco Vendors Study, “very few vendors used potentially effective age verification, leaving youth access to e-cigarettes online wide open … in the online e-cigarette market, vendors do very little to prevent youth access, and have used payment and shipping methods that were banned for cigarettes.”
Many jurisdictions already permit the medicinal use of cannabis and efforts to legalize recreational use have been successful in several parts of the world. Global consumer spending on cannabis is projected to hit $32B by 2022.
For example, in Canada, on October 17, 2018, recreational cannabis was legalized across the country. As with the example set in several US States, legalization doesn’t imply an anything-goes scenario; cannabis distribution will be a highly regulated space, with strict rules and procedures. A consistent criterion is the mandatory check of purchasers’ IDs to prevent underage users from accessing the drug.
While sales are regulated on a provincial level, the online purchase of cannabis products is generally acceptable across Canada. According to Canada Post, the Canadian national mail service, “If the receiver appears to be younger than 25 years old, our trained delivery agent will require an acceptable photo ID … before handing the parcel to the individual. The proof of age requirement means we must also record the name and signature of the receiver.” The success of such measures, however, is highly contingent on how steadfastly they are followed.
For companies providing age-restricted products via online channels, effective identity verification systems are a way to help ensure compliance. With electronic identity verification (eIDV), the consumer’s personally identifiable information (PII) data such as name, date of birth and address, is obtained with their consent, and is checked against data sources to see if the information matches – in other words, it is established if the customer is indeed who he says he is. Layering various other data points on top of PII adds to the level of trust in that identity. This can include email and phone contact data which is confirmable via two-factor authentication. The history and meta data of the contact information also provides data points for further analysis.
Another valuable layer of information is available via document verification. ID documents are photographed and sent in electronically. These photos are then automatically compared to ID document templates to analyze for forgery or alteration. The information can also be recognized and then run through the eIDV process.
Beyond providing age verification compliance measures, these identity verification processes provide a layer of fraud prevention. As online verification is quick and easy for consumers to fulfill, they allow consumers to seamlessly carry on with their transaction without being burdened with additional steps to prove their identity.
For businesses that focus on age-restricted products and services, one of the most fundamental business factors is ensuring convenience for legitimate customers, while reducing the risk of minors obtaining access to such products.