Identity Document Verification as a Lowest Common Denominator Risk Management Technique

Sarasota, FL, November 20, 2014 / By: David Montague, The Fraud Practice LLC


Identity document verification has evolved as a risk management technique by making use of advancements in technology leading to quicker and more accurate verification that a document is real, and an improved consumer experience thanks to streamlined document image capture via webcams and mobile devices. As a result, this risk management technique is more accessible and can be used by all kinds of organizations doing business in the Customer Not Present channel.


There are several industries where identity document verification is used extensively, especially as it relates to KYC and AML compliance requirements, as well as the need for strong identity authentication and verification. While these industries use identity document verification frequently, there are many online merchants and other organizations that can benefit from using this technique, even if only for a subset of their transactions. This is because identity document verification is a technique that can be applied in virtually any country or region and provides risk signals even when traditional identity data, such as connections between a name, phone number and address, is not available for a particular consumer.


In this sense, identity document verification can be used as the lowest common denominator for assessing risk on a Customer Not Present transaction. That is, for almost any transaction or consumer, an organization knows that they can rely on identity document verification to assess risk, even if the consumer is coming from a region where the organization does not have access to reliable tools or data, and even when other identity fraud screening checks are unavailable or provide inconclusive results. Below are two very common scenarios organizations doing business in the CNP channel encounter and examples of how identity document verification provides value as a lowest common denominator risk management technique.

When Consumer Data is Unavailable, Outdated or Inconclusive

When doing business online it is important to establish an electronic identity (e-identity) or profile for each customer based on the identity information the consumer provides. Due to the high degree of anonymity online, it is wise to authenticate and verify this information with other sources, but accurate data isn’t always available. Often there can be inconsistencies in data or there is no data available for consumers who have moved recently, cohabitate with non-family members, are transient or use only a prepaid mobile phone with no mobile or landline subscription service. These are just a few reasons among many why reliable data may not be available for a particular consumer.


Most organizations encounter these issues from time to time and are then left with the decision to either blindly accept the order or turn it down. When identity data lookups cannot provide a reliable risk signal, either because the results are inconclusive or data just isn’t available, identity document verification provides another means of confirming ownership of data and relationship between data points. One of the strengths of identity document verification as a risk management technique is that as long as the consumer has a valid ID, passport or even a utility bill, it can almost always provide a signal of risk and verify the association of a name and address.


When a consumer’s provided identity information cannot be confirmed by other means organizations can look to identity document verification as it provides a way for the consumer to prove they live at a given address while performing identity document verification confirms the document is not forged. Issues with lack of data or accurate data persist even in regions where there is decent overall coverage of identity information that can be authenticated, but the issue becomes more prevalent in countries and regions where there are no or few sources of data for performing identity authentication.

When Reliable Data and Other Fraud Prevention Services are Hard to Come By in a Country or Region

One of the more difficult aspects about expanding sales internationally is understanding how to effectively manage fraud