It’s no secret – cases of identity theft and fraud continue to make headlines every single day. Because of this, it becomes more important than ever for organizations to protect customer privacy, deter fraud and meet compliance regulations. Additionally, when it comes to age restricted commerce (especially in a customer-not-present environment), protecting our youth and keeping the products and services intended for adults out of the reach of children is the #1 objective.

Age restricted commerce such as lottery, online gaming, wine & spirits, tobacco, social networking, wireless and others are not invulnerable to the risks associated with identity theft and fraud. And, as this dynamic industry continues to grow, only assessing if a customer is of age will no longer be sufficient. Determining a minimum age needs to be combined with gaining a deeper insight into the validity of an identity along with fraud patters to help protect customer privacy, meet compliance and prevent fraud.

When developing your Age Verification program, here are a few guidelines to follow:

Step One: Capture basic customer information such as name and address. You should also maintain the ability to collect Date of Birth or Social Security Information as well.

Step Two: Utilize an Age Verification platform that is combined with a robust identity solution to conduct an analytical search on billions of trusted data sources and return a result, including any identity discrepancies it finds.

Step Three: Check that returned identity for minimum age requirements and potential fraudulent activity, applying a deep set of fraud detection analytics to help minimize risk and loss.

Step Four: Depending on the results and your organization’s business rules you can now approve or fail the transaction.

Ongoing: The fraud landscape continues to evolve and change. Throughout your age verification program, it is important to be able to easily make changes to your business rules and processes in order to stay ahead of the fraudsters while also continuing to meet the guidelines set forth in the Children Online Privacy Protection Act (COPPA).

Additionally, it is important to not only assess age, but also gain further insight into an identity and potential fraud indicators so you can determine if the individual fulfills the organization’s business and compliance regulations.

Click here to check out our recent Press Release regarding IDology’s new & improved ExpectID Age solution!

Having the right tools and solutions in place to verify that your customers are who they say they are is a crucial element for not only protecting your business, but also your customer’s identities. If fraudsters are able to get through your barriers, your company could not only lose a substantial amount to fraud, but your customers would feel the pain as well.

At IDology, we provide the additional support customers need to fight the constantly evolving battle against fraud. Our innovative solution can quickly transform and adapt to stay ahead of the ever-changing fraud landscape. In real-time, IDology fraud algorithms give customers the control and flexibility to quickly pinpoint suspicious behavior and easily make the ongoing changes needed to prevent fraudulent transactions.

TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base.  Here is a summary of a few of the results:

26% of surveyed organizations stated that their main use of IDology’s identity verification solutions is to process high risk transactions (View the validated response here).

“IDology’s solution to prevent fraud was easy to implement and has decreased risky transactions in eCommerce.” ~ Application Manager, Small Business Computer Software Company: View the validated response here.

80% of surveyed organizations’ overall fraud losses have declined since using IDology’s identity verification services (View the validated response here).

“[We] mostly reduced the amount of spurious and suspicious enrollments into our prepaid card programs [with IDology].” ~ Patrice Peyret, CEO, Plastyc Inc. (AKA Upside Visa): View the validated response here.

IDology provides a faster, safer way to identify legitimate customers so you are able to complete more transactions in less time. We enable an advanced dynamic decisioning solution that allows our customers to analyze the composition of an identity and detail what the data really means. All in an on-demand system that customers can control to approve legitimate customers and deter fraud.

The Internal Revenue Service recently released its annual “Dirty Dozen” tax scam list. This “Dirty Dozen” listing records a variety of common scams taxpayers can encounter throughout the year. However, the majority of these tricks peak during the tax filing season as individuals prepare their tax returns.

How do you protect yourself from being an identity theft victim?

First of all, the IRS will never:

1. Initiate contact with taxpayers by email to request personal or financial information (this includes text messages and social media channels).
2. Request detailed personal information through email.
3. Send any communications requesting PIN numbers, passwords, or access to credit or financial accounts.

If you receive a message or communication like these, make sure you:

1. Do not reply to the message.
2. Do not open any attachments (Attachments may contain malicious code that will infect your computer).
3. Do not click on any links in a suspicious e-mail or phishing website and do not enter confidential information.

If you think you clicked on a link or attachment:

1. Forward the message to the IRS at phishing@irs.gov.
2. Let credit agencies know that there might be fraudulent transactions in the near future.
3. Change passwords on all your online accounts.
4. Keep an eye on all bank and credit card statements.
5. Take immediate action if anything becomes suspicious.
6. Close compromised accounts.

Check out this infographic on the IRS “Dirty Dozen” and how to protect yourself today  (click to expand):

Regulatory compliance “describes the goal that corporations or public agencies aspire to achieve in their efforts to comply with relevant laws and regulations.”

Various industries have a range of compliance regulations they must meet – financial institutions and payment processers are just two examples of industries in which regulatory compliance is key focus. When it comes to rules mandating that organizations have confidence that their customers are who they say they are, a few compliance regulations stand out:

• Customer Identification Program (CIP): CIP verifies the identity of individuals wishing to conduct financial transactions. CIP became a requirement by the US Patriot Act for financial institutions in 2003 to prevent financing of terrorist operations and money laundering. Banks are required to keep records of identifying information and check customer names against terrorist lists. Read more about CIP Compliance here.

• Know Your Customer (KYC): The process by which a bank or financial institution checks the identity, background and other aspects of the source of wealth of potential and existing customers. Legislation and regulation require firms to obtain evidence of identity of a customer at take-on and to keep a record of that evidence for as long as there is a relationship with a customer. Read more about Know Your Customer Rules here.

• Federal Financial Institutions Examination Council (FFIEC) Guidelines: Due to the increase of sophisticated criminals gaining unauthorized access to online banking accounts, the FFIEC issued a supplement to its 2005 Authentication in an Electronic Banking Environment guidance. This supplement, released in June 2011, provided more specific information around authentication technologies and established minimum controls for banks to follow in order to better address the higher authentication risks they now face. Read more about the FFIEC Guidelines here.

• Office of Foreign Assets Control (OFAC): The Office of Foreign Assets (OFAC) at the U.S. Department of the Treasury administers and enforces economic and trade sanctions against targeted foreign counties, terrorism-sponsoring organizations, and international narcotics traffickers based on U.S. foreign policy and national security goals. The events of September 11, 2001 increased the diligent need for financial institutions to monitor transactions performed by or through them to better comply with the economic and trade sanctions enforced by OFAC of the U.S. Department of the Treasury administers. Ream more about OFAC compliance here.

TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base. When asked, 67% of customers use identity verification to meet compliance regulations.

Source: Survey of 43 users of IDology ExpectID.

Here is what one customer had to say about meeting regulatory compliance with the advanced identity processes delivered by the IDology platform:

“Using IDology enables us to meet Banking Regulatory and Compliance requirements.” ~ Operations Manager, Small Business Banking Company. View the validated response here.

Finding a comprehensive and robust identity verification platform that gives you the flexibility to protect your organization against fraud, money laundering, and terrorist activities, among others is a critical element for any organization striving to meet compliance.

Thin files can also refer to under or unbanked individuals – those customers whose financial needs are not fully served by traditional financial institutions. A 2012 report by the World Bank showed that ¾ of the world’s poor do not have a bank account, “not only because of poverty, but also due to costs, travel distance and paperwork involved.” Under or unbanked individuals can also include minorities, older widows or divorcees whose credit histories link to their husbands’ name only, retirees without a mortgage, extremely wealthy individuals who pay cash for everything and people who deliberately do not use or want credit.

So, how do you verify the identity of these individuals? They are legitimate customers who want your business after all…

1.       Utilize an Identity Verification Solution that has more than credit-based data

Many identity verification providers rely primarily on credit based information to confirm a potential customer is who they say they are. However, thin files have little-to-no credit history. Therefore, in many cases, these particular individuals will either be “failed” or escalated to manual review consequently incurring additional costs and potentially missing out on new revenue. Using non-credit based information has been proven to verify more identities while also reducing instances manual review.

2.       Implement Dynamic Identity Proofing

Dynamic identity proofing, also known as Knowledge Based Authentication (KBA) or Out-Of-Wallet Questions, can be used as a higher level of verification in situations where businesses want more confidence that the person they are dealing with is real. It is important to find a solution that gives you the control and flexibility to escalate to this higher level of verification – for example, in certain high risk situations or when the customer is under or unbanked. KBA works by utilizing a series of multiple choice questions that are developed in real-time based on personal information found in an individual’s file. When using mainly credit-based information, these questions are not only difficult to serve up when an individual has a thin file, but they also can be overly personal or intrusive which could damage customer satisfaction. Businesses employing non-credit based KBA questions realize the following benefits:

• Faster approval rates to drive more revenue
• Decreased costs through lower manual review
• Improved customer satisfaction and confidence through friendly, non-intrusive questioning
• Improves detection of fraudulent activity

TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base. Here is what one customer had to say about their experience with IDology when it came to thin files:

“[IDology offers] higher performance on thin file customers.” ~ Risk Manager, Medium Enterprise Banking Company. View the Validated Response here.

As the under and unbanked market continues to expand, it becomes more important than ever to find new and innovative ways to verify your customers identity while also reducing fraud, increasing revenue, improving customer satisfaction and improving compliance.

When it comes to a call-center environment, utilizing dynamic KBA – knowledge-based authentication is an effective way to verify a customer is who they say they are without putting your business or your customer’s privacy at risk. Dynamic KBA works by presenting a series of fact-based multiple choice questions which only the person being verified can answer. These questions are dynamically created and do not require a previous relationship with the consumer. Click here to understand more about dynamic KBA.

When implementing identity verification solutions in your call center, here are some tips to make the process more effective:

~ Automate as much as possible using a streamlined verification process

• Shortens call times
• Maximizes efficiency
• Increases revenue

~ Utilize dynamic KBA to quickly approve orders and/or customer account changes

• Reduces multiple call transfers
• Improves customer satisfaction
• Reduces fraud
• Keeps you compliant

~ Look for a solution provider that offers several types of questions and allows you to set preferences for which questions will be asked

• Flexibility to adapt to your customer’s demographics and preferences
• Make changes based on CSR (customer service representative) feedback

~ Utilize non-credit based questions

• Credit-based questions tend to be less friendly and harder to answer, even for the real person

~ Reduce the amount of personal information required to verify an identity

• Limits the amount of data exposed
• Reduces the chances of employee misuse
• Reduces the chances for caller coaching

~ Find a solution that is offered as a Software as a Service (SaaS)

• Shorter implementation
• Multiple deployment methods
• CRM integration

For more information on how to improve your call center performance, download our whitepaper here.

TechValidate, a third party research organization, recently conducted a survey of our esteemed customer base.  33% of organizations surveyed have deployed IDology’s identity verification platform into their call centers (Source: Survey of 45 users of IDology ExpectID. View the validated response here).

When customers were asked why they chose IDology for their identity verification platform, here is what they had to say (Source: Survey of 46 users of IDology ExpectID):

There are a variety of business challenges addressed by “souping up” an organization’s identity verification program.  TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base. When asked, customers responded that they use identity verification to solve the following business challenges:

Source: Survey of 43 users of IDology ExpectID.

The top business challenges include meeting compliance regulations such as CIP (Customer Identification Program) and Know Your Customer (KYC) Rules as well as other rules and regulations such as OFAC, FFIEC, Red Flag and NACHA Compliance, automating business processes and lowering fraudulent transactions.  Reducing manual processes and the costs associated are other key business challenges of note from this survey.

However, how do organizations address these challenges without making the process too cumbersome and potentially jeopardizing customer satisfaction? Tighter controls can tend to slow down approval rates and even frustrate customers.

The organizations that have found the most success in satisfying all of their business needs while improving customer satisfaction are the ones that find a partner that offers a holistic identity verification solution. Verifying the customer is who they say they are is always front and center – but a true identity verification program on “steroids” includes much more than that. It allows a company to not only verify an identity and age, but also provides the dynamic and flexible technology platform needed to prevent fraud, provide Knowledge-Based-Identity verification, comply with regulatory requirements and increase legitimate customer activations (aka more revenue).

Here is what a few customers had to say when asked about IDology’s identity verification solution:

“IDology has allowed us to take an error prone and cumbersome process, and automate it in a natural way. Our customers much prefer to verify their identity through our online form than to send us a copy of ID documents.” ~ IT Director, Medium Enterprise Real Estate Company: View the validated response here.

“Very easy to use and has helped us maintain the level of service we are accustomed to providing. IDology’s interface/system has been very reliable.”  ~ Alex Suarez, Business Professional, Ready Credit Corporation – View validated response.

“Our identity verification process is more stream-lined and automated. [IDology] enabled us to incorporate the system into our web site, kiosks and mobile devices.” ~ Operations Manager, Medium Enterprise Hospitality Company – View validated response.

With the advance of technology giving businesses the ability to complete an increasing amount of transactions in a customer-not-present environment (i.e. online or through a call center), it has become very important for businesses, and Risk Managers in particular, to turn to identity verification practices to mitigate risk by ensuring customers are who they say they are.

So, how do Risk Managers utilize identity verification? TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base. When asked, the Risk Managers responded that they use identity verification in the following ways:

• Meet CIP (Customer Identification Program) compliance
• Process high risk transactions
• Account Origination
• eCommerce

As a whole, organizations surveyed appeared to have a similar response:

• 50% of surveyed organizations use IDology’s identity verification solutions to meet CIP (Customer Identification Program) compliance. View the validated response here. (Source: Survey of 46 users of IDology ExpectID)
• 26% of surveyed organizations use IDology’s identity verification solutions to process high risk transactions.  View the validated response here. (Source: Survey of 46 users of IDology ExpectID)

Those companies that successfully implemented identity verification solutions saw the following results:

• 60% of surveyed organizations experienced increased ability to meet compliance regulations including CIP (Customer Identification Program) and Know Your Customer (KYC) rules with IDology. View the validate response here. (Survey of 43 users of IDology ExpectID)
• 44% of surveyed organizations experienced a decline in fraud losses with IDology. View the validated response here. (Source: Survey of 43 users of IDology ExpectID)

Other benefits companies realized were an increase in revenue, lower processing and business costs, high locate and approval rates of individuals, lower underwriting costs and the ability to measure and share performance with the team.

From this survey, Risk Managers seem to rely on identity verification solutions largely when it comes to improving compliance and lowering costs and the risk associated with fraudulent transactions. However, it is imperative for Risk Managers to mitigate risk with a holistic point of view – ensuring the organization maintains and/or improves customer experience and drives increased revenue. One approach is Dynamic Knowledge Based Authentication (KBA), a simple, non-intrusive way to test an identity without alienating customers and without putting their identity at risk. This tactic is based on out-of-wallet questions that businesses use to establish trust with their customers and then maintain that trust throughout the entire customer lifecycle. Risk managers use these multiple choice, out-of-wallet questions differently depending on their business needs – some, as a primary means of identity verification and others as a step-up authentication method in certain high-risk situations. The key is to find a solution that is fully customizable with the flexibility to make on-going changes based on shifting business priorities and risks.

Here is what a few Risk Managers had to say when asked about IDology’s identity verification platform:

• “[IDology offers] higher performance on thin file customers.”  ~ Risk Manager, Medium Enterprise Banking Company: View the validated response here.
• “We have created a more positive user experience for our customers, which in the mobile payments market makes all the difference.” ~ Risk Manager, Medium Enterprise Financial Services Company: View the validated response here.

Why do large enterprises use identity verification? TechValidate, a third party research organization, recently conducted a survey of our trusted and valued customer base. One of our customers, a Large Enterprise Financial Services Company, responded that they use identity verification in the following ways:

• Meet CIP compliance
• Account Origination
• Process high risk transactions
• eCommerce
• Enable access grants

View the validated response here.  These motives for pursuing identity verification were reiterated by all large enterprise organizations that participated in the survey.

The Risk Manager at one Large Enterprise Professional Services Company commented about how they use identity verification; “We use IDology’s service throughout our department. We have had a positive impact in two fashions, the first is we are able to verify and approve more good orders, secondly, we are able to identify and stop fraudulent transactions.”  (View the validated response here)

The Application Manager the Enterprise Financial Services Company mentioned above notes; “We’ve been able to provide a high quality out-of-wallet or knowledge-based-authentication solution to our customers with minimal effort and superb customer service.”  (View the validated response here)

Large enterprises realize that there is a strong business need to protect themselves from fraud, identity theft, hackers, data breaches, and other security risk exposure. All while ensuring compliance and maintaining a customizable and smooth user experience.

Utilizing a real-time ID verification and fraud prevention platform to drive revenue, decrease costs and mitigate risk is critical within large enterprise organizations and helps them build increased confidence with their customers.

Check out the complete Large Enterprise Financial Services company case study here.

Based on the Center for Financial Services Information (CFSI), the amount of underbanked people is about the same as when we wrote our whitepaper, but a lot more information about the market size is now available.  This is according to the 2011 Underbanked Market Sizing Study:

United States underbanked financial services are a $78 billion marketplace that encompasses close to two dozen products and services provided to over 68 million consumers.

First let’s clarify what the report means by underbanked:

Underbanked refers to those consumers whose financial needs are not fully served by traditional financial institutions. These consumers use alternative financial services to meet some or all of their financial needs. The “underbanked” designation in this report also applies to consumers who have subprime credit scores, thin or no credit files, or find their access to mainstream financial products challenged by low to moderate household incomes. Collectively, the underbanked represent over $1 trillion in annual income.

There is a lot of data included in the report broken out by the individual market segments mentioned above.  And projections based on the first half of the year’s activity show 9% market growth resulting in $85 billion in overall revenue.  It’s no wonder the inaugural Money 2020 show sold out with 2500+ attendees.

Seven years ago today I got involved with IDology and it’s been a wild ride.  While our identity verification services identify all consumers, we’ve recognized the importance of the underbanked market and the nuances involved in verifying demographics that are more difficult to locate such as new in country or younger demographics.  I’m proud of our ability to address the verification needs of the alternative financial services market and am happy to continue serving this market.