ID Document Verification: What Is It & How Can It Prevent Digital Fraud?
Melissa AU Team | |
Until the COVID pandemic, there were many people who preferred visiting the bank to make transactions rather than making online transactions, shopping for groceries in the market rather than through an app and so on.
The lockdown forced everyone to embrace digitization and learn to move with technology. Companies too have had to work towards making themselves more accessible to customers. Now that we’re comfortable using this technology, we’re not likely to move backward. As compared to 2001, online retail sales in 2022 have increased by 300%.
That said, digitization does come with certain risks. Every day, newspapers carry stories of people who have been scammed out of their savings by identity thieves and companies that have fallen prey to data breaches. Identity fraud cost consumers $56 billion in 2021. The best way to protect yourself against these challenges of digitization is with ID document verification.
How Does ID Document Verification Work?
In today’s digital world, one cannot expect a customer to physically visit an office to prove his or her identity. ID document verification takes the checking process online and makes it quicker and more convenient. Common documents used for verification include ID cards, passports, driver’s licenses, etc. There are 2 stages to ID document verification. For this, the customer must upload a photograph or scanned copy of an ID document and a selfie photograph.
First, the verification software uses AI and Machine Learning algorithms to extract information and check the details on the document against those stored in global, third-party databases to check that they are accurate and valid. It then uses facial recognition and facial comparison algorithms to recognize a match between the photograph on the document and the selfie.
It can also go a step further to verify liveness. For this, the individual must hold the camera up to his/her face while the verification software checks for eye movement, etc. to verify that the image is live and not static. This makes it harder for fraudsters to use stolen identity documents to impersonate a customer.
Who Can Benefit From ID Document Verification?
ID document verification as a form of Knowledge-Based Authentication is especially useful for:
- Banking and Finance organizations that permit digital transactions, account creations, etc.
- Government and public administration authorities that provide digital services for issuance/renewal of electronic certificates, applications for government benefit schemes, etc.
- Telecommunication companies with online operations for purchasing new mobile numbers.
- Online product retailers
- Insurance service providers
- Healthcare organizations that rely on documentation for patient treatment and billing
How Does ID Document Verification Help?
ID Document Verification improves the customer experience with the company and helps prevent fraud.
- Frictionless Customer Onboarding
We’re an increasingly impatient generation and having to wait a few days for an account to be created can be enough to make a potential customer turn to a competitor. At the same time, companies cannot afford to create unverified accounts.
When an individual creates an account as a customer, companies must ensure that the individual is who he/she claims to be. With ID document verification, the process is streamlined and identities can be verified in minutes.
Customers do not need to make physical visits to an office. Thus, the waiting period for onboarding and account creation is reduced. In turn, the customer is happier and forms a positive impression of the company.
- Prevent Identity Fraud
Identity fraud is not something new. Even before the advent of remote services, fraudsters targeted people with weak security to impersonate customers. However, it is much easier to impersonate a person online. It is quite easy for fraudsters to get their hands on a customer’s personal details such as their full names, addresses, phone numbers, social security numbers, etc. Such information can be bought from the black market and the dark web.
Incorporating ID document verification and liveness checks for digital interactions can help reduce instances of identity fraud. Even if a cheat does get a person’s personal details, he may not have documentary evidence to support it. And, if this too were somehow available, the facial recognition and liveness check would keep them from being able to use it.
- Minimize The Use Of Synthetic Identities
Another way digital criminals cheat companies is by using fake identities to create accounts. For example, they may use fake identities to apply for credit cards. Once the card is issued, they use the maximum credit amount available to them and then disappear. The issuing banks have no way to find the individual and recover the money.
ID document verification helps verify that all identity documents used by applicants are true and valid. Along with verifying the details against third-party databases, the software can also identify signs of tampering o the ID document.
- Build Trust
Being the victim of data theft or fraud not only has financial implications for companies, but also lowers the brand image. In many cases, the most significant factor contributing to such fraud is a lack of internal control and the company’s failure to take necessary steps toward maintaining a high-quality, secure database. No one wants to conduct business with a company that is negligent and fails to protect its customer’s interests.
Incorporating ID document verification helps companies keep fake and outdated information out of their databases and minimizes the risk of data theft. The process also acts as a sign to customers that the company is serious about security and builds a more trustworthy image for the brand.
Summing It Up
Most forms of identity theft and other digital fraud can be prevented by setting up a reliable and efficient identity verification system. Fraudsters are constantly on the lookout for loopholes that they can take advantage of, and companies must stay ahead of them by incorporating stronger digital safeguards such as ID document verification.
ID document verification is required not only for companies to prevent fraud and protect themselves as well as their customers but also to improve the customer experience and build a trustworthy brand image.