Identity verification is the act of confirming that the identity someone asserts is the same as their actual identity and API identity verification solutions exist to streamline this process. It is a crucial step to establish if a person is truly who they say they are. In the current digital era, where information is easily available, and transactions happen with a simple click, the significance of identity verification in preventing identity fraud is extremely important. It serves as a strong deterrent against malicious activities like identity theft and fraud. When organizations enforce strict verification methods, they can guarantee that only legitimate individuals have access to sensitive information or services.
6 Identity Verification Methods
There are several methods and systems for identity verification, each employing different approaches. Globally, Know Your Customer (KYC) and Anti-Money Laundering (AML) rules guide identity verification techniques. However, specific regulations and organizations in each country oversee these rules. In the United States, for instance, the Financial Crimes Enforcement Network (FinCEN) is among the agencies regulating identity verification methods. These methods generally fall into one of six categories.
- Knowledge-based authentication
- Two-factor authentication
- Credit bureau-based authentication
- Database methods
- Online verification
- Biometric verification
1. Knowledge-Based Authentication
Knowledge-based authentication (KBA) confirms a person’s identity by prompting them to answer security questions. These questions are typically crafted to be easy for the individual to respond to but challenging for anyone else. Examples include queries like “How many pets do you have?” or “Who was your favorite teacher?”. To enhance security, KBA may include a requirement to answer questions within a specified time. The main advantage of KBA is its user-friendly nature, making it easy for individuals to comprehend. However, a notable drawback is that it has become increasingly simple to discover answers through social networking and other conventional forms of social engineering.
2. Two-Factor Authentication
Two-factor (2FA) and multi-factor authentication (MFA) are important tools in preventing identity theft and fraud. They require customers to enter a code sent to their email or mobile phone, making the process recognizable and easy to understand. By using 2FA or MFA, you can verify a customer’s email address and phone number, ensuring that their data is entered correctly.
In addition to the usual username and password, two-factor or multi-factor authentication requires users to provide a form of personal identification, known as a token. This token, which can be something users have memorized or in their possession, such as a code from the authentication agency, acts as a deterrent for fraudulent activity. Two-factor authentication is particularly helpful for creating accounts and resetting passwords, although it does require users to have their mobile phones with them during the authentication process.
3. Credit Bureau-Based Authentication
A credit bureau-based authentication method uses data from one or more credit bureaus to verify identity. These companies hold a lot of credit information on consumers, including name, address, and social security number. By using a score, this method creates a strong match without impacting the user’s experience. However, it may not work well for individuals with limited credit history, such as young people and recent immigrants.
4. Database Methods
Using data from different sources, database ID methods verify a person’s identity card. These methods help evaluate the risk associated with a user, reducing the need for manual reviews. However, a major drawback is that they don’t guarantee the person entering the information is the same person involved in the transaction, mainly due to the prevalence of fake online identities.
5. Online Verification
Online verification employs methods like artificial intelligence, computer vision, and human review to check if a government-issued ID belongs to the users. Users usually need to provide a photo of themselves holding an ID to confirm the match between the person in the ID and the one holding it. While online verification is highly secure, some users may find it bothersome or invasive to submit an image of their face and ID.
6. Biometric Verification
Biometrics is a way to confirm identity and validate individuals based on physical traits. Common biometric methods include facial recognition, voice recognition, iris and retina scanning, and fingerprinting. These approaches provide a convenient solution for users once the initial setup is completed, as there is no need to remember passwords or answer security questions.
However, biometrics has its drawbacks. Biometric data can be vulnerable to theft. Consider the widespread availability of personal pictures on social media or the unintentional recording of one’s voice. Additionally, databases storing fingerprints could be compromised through hacking. Once this information falls into the wrong hands, it becomes easier for malicious individuals to commit fraud against various institutions.
Where Is It Necessary To Verify Identity?
Identity verification is essential in various contexts, both online and in-person, particularly for national identity cards. These verification services find application in diverse sectors, such as financial services, e-commerce platforms, social networking websites, and forums, aiming to combat illegal activities like money laundering and identity theft. For instance, when opening a bank account, verifying your identity is a crucial step that ensures the security of the process. Identity verification is also integral in:
- Finance Sector:
Banks heavily rely on identity verification, especially during processes like opening new accounts, to safeguard against identity fraud. It is a mandatory step in financial transactions, including online sales and purchases.
- Telecommunications and Insurance Industries:
Identity verification plays a crucial role in sectors like telecommunications and insurance to ensure the legitimacy of transactions and prevent fraudulent activities.
- Apps and Platforms:
Various applications and online platforms incorporate identity verification to establish the authenticity of users and maintain a secure environment.
- Government and Administration:
Identity verification is a fundamental requirement in government and administrative processes, contributing to the overall security and reliability of official interactions and transactions.
