Identity Verification: The real superhero combating fraud, chargebacks, and default rates.

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Fake IDs have existed for many years and have been used by many people (maybe even you) for “harmless” reasons. I say harmless because I’m thinking of my teenage years when I would borrow my sister’s ID to buy beer for my friends or maybe even get into clubs. I guess this is why seeing a teenager borrowing an ID, or ordering a fake one to buy liquor is such a cliché in American teenage movies. Speaking of that, have a look at this masterpiece of a scene, coming straight from the 2007 comedy Superbad: 

As funny as it is to rename yourself McLovin to go to the liquor store, the fact is that using a fake ID is not as harmless as you may think. In 2019 alone, consumers reported losing more than $1.9 billion dollars related to Identity fraud, an increase of $293 million from 2018. And in 2020, the U.S Federal Trade Commission (FTC) released a statement on April 15 of 18,235 reports related to COVID-19 schemes, and people reported losing $13.44 million dollars to online fraud. Now, this last sum is only in the U.S: think of how much money that is now, worldwide, lost to online fraud… Not laughing about the McLovin ID anymore, right? 

Why IDV is the easiest way to protect your business from fraudsters

This is exactly where our superhero “IDV” (for identity verification) steps in. So, how exactly does IDV combat fraud? Well, you may already know how document and identity verification procedures work. But maybe you’ve only experienced validating your ID in person, so you know how painfully annoying it is, not to mention, time-consuming. An automatic IDV solution validates someone’s identity without any hassle, remotely, and all the while protecting your business from fraudulent activity.  Not to mention it is the only way to guarantee 100% the refusal of your infamous fraudster. Implementing a strong automatic IDV will allow you to control who gets in by creating certain checks. Want to read about a company that has already done this? Check out StayAlfred’s case study.

As amazing as this sounds (and a no-brainer decision if you ask me) there are still PLENTY of institutions out there without the resources, technology, or expertise to implement an eIDV (e for electronic). And therefore have to deal with document fraud manually, while spending thousands of dollars if not more, doing so. 

Manual ID verification is not enough

Manual Identity Verification may seem like the safest way to verify identity, after all, I’m using my own eyes to corroborate right? I mean, isn’t it riskier to have users try and identify themselves online by stealing someone else’s identity? After all the internet is super dangerous right?

Yeah.. not quite! I see your point, and this may have been true 10 years ago, but now I can safely say that technology is way better than the human eye. I mean, think back to the beginning of this article, how many club bouncers or liquor resellers get abused every year by fake IDs? Sure, some bouncers or resellers probably look the other way, but still: formally recognizing someone on an ID is hard. The good news is that eIDV also works to identify specific biometric checks, meaning that it would still work when you age or decide to finally get those bangs. And beyond picture fraud, there are many other types of fraud that can be very difficult to perceive with the human eye (unless you have a super trained eye or a robotic eye for that matter)

What kind of document fraud are we talking about?

There are several types of document fraud the most popular ones being:

  • Altered documents: When a scammer modifies & manipulates an original document (changing the picture, color, names, etc…)
  • Real stolen documents: These are original documents that have been stolen from their rightful owners and being used by a fraudster. 
  • False documents: These are documents completely created from scratch to look like an original document.

Whatsmore, things start to get extra complicated as fraudsters get more creative with their schemes, like stealing original blank documents and forging all the information. So yes, it can be a real mess not only because of the millions of ways to tamper with Id’s but also because of the millions of different worldwide id’s currently in circulation. 

Where to start:

So how do I fight this? – By implementing an automated IDV with a specialized provider. They will have the tools, expertise, and technology to detect the different types of fraud and support thousands of different documents around the globe. 

And how do THEY fight this? – Well, the first step of any identity verification process is usually to ask the end-user to upload a series of documents. Then Artificial Intelligence analyzes the document and extracts via OCR (for Optical Character Recognition) all the information provided. This allows you to receive basic information within seconds: first name, middle name, last name, address, date of birth. As mentioned earlier, there are over 15,000 document types and versions in the world. A professional provider makes sure that the ID you receive comes from the right country, by automatically detecting the type of document that was uploaded and comparing it with other templates. After that, advanced image analysis is used to prevent common, as well as more sophisticated spoof attempts. Machine learning allows to notably detect colors, alterations both digital and manual, type of surface used, presence of objects, photo alterations, among many others.

The best possible detection for falsely represented documents is to compare a selfie or short video (which we like to call Liveness check) of the user to the image on the ID provided. A document check + a facial check = legitimate verified users. 

So yes, eIDV or automatic IDV (which is the same) really is the hero of the story, saving us from the McLovins of the world, protecting us from losing thousands of dollars in chargebacks or frauds, and overall making the world a safer place by stopping suspicious characters from taking over. Reach out to one of our eIDV consultants, they can tell you more about solutions, or share some horror stories about companies who have been victims of identity fraud. Either way, they’d love to chat.

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