A Complete Guide to Online Identity Verification

Ensuring the security and integrity of user identity has become a priority for businesses and individuals. Online identity verification has emerged as a reliable solution, helping organisations establish the identity of users and detect potential fraud or malicious activity. It’s estimated that 1 in 15 people globally is affected by a form of identity fraud, making protection for your business even more important than ever.

In this guide, we will delve into the concept of online identity verification, its importance, risks and challenges, the process of online ID checking, and benefits, such as those offered by Enformion.com, offers.

Additionally, we will discuss the technologies currently utilised and explore the benefits of using mobile data to enhance identity verification.

Definition of Identity Verification

Identity verification is the process of confirming the authenticity and legitimacy of an individual’s claimed identity. It involves verifying the accuracy and validity of various identity attributes, such as name, age, address, and other pertinent information.

How is Identity Verification Different from Authentication?

Identity verification and authentication are distinct processes, though they are often used together to establish trust and secure online transactions. Here are the differences between them:

Identity verification is the process of confirming an individual’s claimed identity by validating various attributes such as name, age, address, and other relevant information. It aims to ensure that the person is who they claim to be. This process typically involves verifying identification documents and conducting background checks. Mobile data can be used to expedite this process.

Authentication, on the other hand, is the process of verifying the identity of a user during a specific session or interaction. It ensures that the user attempting to access a system or perform a transaction is the same individual who was verified during the identity verification process. Authentication is usually done through the use of credentials such as usernames, passwords, one-time verification codes, biometrics, device information, Mobile Network Operator (MNO) data, or other secure tokens.

Importance of Digital ID Verification

Digital ID verification is essential for ensuring the trustworthiness and security of online transactions and account access.

By verifying user identities, businesses can prevent identity theft, comply with regulatory requirements, reduce fraud, enhance cybersecurity, and provide a seamless and trustworthy user experience.

Evolution of Online Identity Verification

Over time, online identity verification methods have evolved to adapt to the evolving landscape of fraud threats. Technological advancements have introduced more sophisticated and robust verification methods, including biometrics and facial recognition.

These technologies frequently supplant traditional methods like physical document verification, offering a quicker and more dependable means of verifying identity. This enhances both accuracy and user experience.

Common Methods of ID Verification

Document Verification: This approach entails validating the authenticity of identification documents like passports, driver’s licenses, and identity cards. Digital solutions now enable businesses to remotely verify documents using advanced algorithms.

SMS Verification: SMS verification, including one-time passcodes, entails sending a code to a registered mobile number, which the user must enter to confirm their identity. This method verifies the possession of the mobile device associated with the registered number. However, there are associated risks due to account takeover frauds like sim swapping.

Device Verification: Device verification assesses the trustworthiness of the device used by an individual by considering factors such as device type, location, IP address, and other device-related attributes.

Authentication Apps: These apps generate time-sensitive codes that users input for verification. Installed on smartphones, they provide an additional layer of security.

Biometric Verification: Biometric verification utilizes unique biological or behavioral attributes such as fingerprints, facial features, or voice recognition to verify identity.

Credit Check-Based Verification: This method involves checking an individual’s credit report and score to verify their identity, assessing patterns and discrepancies in financial behavior.
Two-Factor Authentication: Two-factor authentication requires users to provide two separate forms of identification, such as a password and a one-time verification code sent via email or SMS.

Risks and Challenges in Identity Verification

While identity verification methods offer enhanced security, they are not without risks and challenges:

Identity Theft: This involves unauthorized access to an individual’s personal information for fraudulent purposes, leading to significant financial and reputational harm.

Methods Employed by Identity Thieves: Identity thieves utilize various techniques, including phishing, sim-swap attacks, account takeovers, and data breaches, to acquire or exploit valuable personal data.

Phishing: Fraudulent attempts to obtain sensitive information, often through deceptive emails or websites designed to resemble legitimate entities.

Sim-Swap & Account Takeover: Sim-swap attacks occur when malicious actors convince a phone carrier to transfer a victim’s mobile number to a device they control, allowing interception of verification messages and access to accounts.

Data Breaches: Unauthorized access by individuals to sensitive data stored by organizations, with stolen data being utilized for identity theft.

Consequences of Identity Theft: These range from financial loss and damaged credit to reputational harm and emotional distress for the victim.

Consequences of Poor Identity Verification & Lengthy Identity Verification Processes

Businesses face significant consequences if they fail to strike the right balance in their online identity verification process. Industries subject to regulations, such as online banking, have a legal obligation to conduct ID checks. In 2022, UK banking customers lost over £1.2 billion to online fraud.

However, it’s crucial to streamline these checks to avoid creating a poor user experience for online customers. A cumbersome verification process can directly impact customer acquisition and retention rates.

Conversely, inadequate ID checks expose businesses to a higher risk of falling victim to online fraud or facing legal repercussions from regulators. Mobile data serves as a reliable source of customer information that can seamlessly integrate into existing processes without adding friction.

What is Digital ID Checking?

Digital ID checking, also known as online or digital ID verification, is the process of confirming an individual’s identity through digital means. Rather than relying on in-person verification, online ID checking harnesses technology and diverse verification methods to establish trust and authenticate identity remotely.

How Digital ID Verification Works

Digital ID verification utilizes automated processes, algorithms, and technological solutions to authenticate identity attributes. It amalgamates different verification methods, including document verification, biometrics, device checks, and more, to establish a comprehensive identity profile and ascertain the legitimacy of the claimed identity.

Data provided by Mobile Network Operators also serves as a potent tool for digital ID verification. This data is considered trustworthy, as it is seldom altered by customers compared to traditional factors like address. Furthermore, it is more difficult to counterfeit or manipulate for fraudulent purposes.

Traditional ID Checks vs. Online Verification API

Traditional ID checks, such as physical document verification, are labor-intensive and prone to human error. Online verification APIs empower businesses to automate the verification process, ensuring enhanced accuracy, efficiency, and scalability. They seamlessly integrate with various verification methods, offering a smooth and real-time identity verification experience.

The Benefits of Digital ID Verification

Implementing digital ID verification offers several advantages, including:

Regulatory Compliance: Digital ID verification aids organizations in meeting regulatory obligations concerning customer identification, Anti-Money Laundering (AML) regulations, Know Your Customer (KYC) guidelines, and more.

Enhanced Fraud Prevention & Cybersecurity: By employing multiple verification methods and conducting real-time checks, digital ID verification significantly mitigates the risk of fraud and bolsters overall cybersecurity measures.

Cost Efficiency: Automated digital ID verification processes streamline operations, reduce manual efforts, and minimize expenses associated with traditional identity verification methods.

Improved Customer Experience: Digital ID verification delivers a seamless and user-friendly experience, eliminating the need for individuals to physically present documents or visit offices for identity verification.

Best Practices for Implementing Online Identity Verification

When contemplating the optimal approach for your online identity verification procedures, several considerations come into play, balancing robust checks with minimizing additional friction within your verification process. These include:

Choosing the Appropriate Verification Method

Selecting the right verification method for your customers is crucial. Leveraging mobile data is an excellent option as it’s reasonable to assume that most individuals possess a mobile device, facilitating the use of associated data for ID checks and verification.

Ensuring Compliance with Regulations

Online businesses must adhere to stringent ID checks as mandated by the jurisdiction and industry, serving to safeguard against online fraud and money laundering.

Prioritizing User Experience

Maintaining customer satisfaction is paramount when assessing your online verification process. While ensuring security, overly complex ID checks or excessive friction can lead to diminished customer retention rates over time.

Regularly Updating Verification Processes

Given the advancing proficiency of cyberattacks, routinely reviewing and updating your processes to counter the latest risks is imperative.

Technologies in Online Identity Verification

Several technologies play a vital role in the online identity verification:

Mobile Data APIs: These APIs empower businesses to retrieve and analyze data linked to mobile devices, facilitating device verification and bolstering fraud prevention measures.

Facial Recognition: This technology assesses facial attributes to authenticate and verify individuals, offering a rapid and contactless verification experience.

How Mobile Data Strengthens Identity Verification

Mobile data offers valuable insights and fortifies identity verification in several ways:

Advantages Over Traditional Methods: Verification techniques utilizing mobile data, such as device intelligence checks, furnish real-time and contextual data, rendering them more dependable and precise than conventional approaches.

Data Reliability: Mobile data sources provide comprehensive and current information, empowering businesses to authenticate identity attributes with heightened confidence.

Global Accessibility: Mobile data is globally accessible and exhibits greater standardization compared to other forms of ID verification data.

Instantaneous Results: Utilizing a mobile data API, mobile number databases can be accessed in under a second. This expedites the verification process and reduces expenses when contrasted with scrutinizing physical ID documents.

Industries Embracing Digital Identification

Digital ID verification is gaining traction across various industries, driven by diverse factors:

Financial Services: Stringent regulations like Know Your Customer (KYC) and Anti Money Laundering (AML) necessitate online ID checks by banks and financial institutions to combat fraud effectively.

Healthcare: With the rise of remote and online healthcare services, digital identity verification ensures consistent patient data and safeguards against unauthorized access to sensitive information.

E-commerce: Increasing instances of online fraud underscore the importance of non-regulated e-commerce businesses conducting ID checks to mitigate the financial impact of cybercrime.

Travel and Hospitality: Online ID verification is employed to confirm the identity of individuals renting holiday properties, protecting property owners from potential damage and other risks associated with their assets.

Gambling & Gaming: Gambling companies must verify that platform users are of legal age, driving efforts to streamline onboarding processes. Mobile ID verification helps reduce friction in these processes.

Adult Entertainment: To safeguard children from harmful online content, the adult industry faces increasing regulatory pressure to conduct comprehensive ID verification for users. Mobile phone numbers are often utilized for this purpose instead of credit card details.

Online Verification APIs for Frictionless ID checks

For various industries and beyond, online verification API tools typically offer the swiftest and most efficient means of enhancing their current ID verification processes. This is due to their seamless integration into existing systems and the rapid retrieval of associated mobile data lookups from any location worldwide. Moreover, they are deemed more dependable when harnessing mobile network operator data, given its increased resistance to manipulation.

Final Thoughts

In summary, online identity verification stands as a pivotal component in ensuring secure and reliable online transactions. Through the utilization of technologies such as mobile data APIs and biometric verification, businesses can establish a resilient and streamlined online identity verification process that effectively harmonizes security with user experience.