Breakthrough Practices in Identity Authentication

Rounding out our October spotlight on identity fraud and identity authentication, we have recently published a comprehensive white paper report presenting a 360-degree perspective of the issue, and the most cost-effective solutions. Below are some highlights from from the paper. You can download the entire report free at http://www.fraudfighter.com/financial-whitepaper. Complementing the paper, we are also presenting a 60-minute webinar on the "Breakthrough Practices in Identity Authentication" that will reduce losses to fraud and facilitate compliance with financial regulations.

A Plethora of ID Types

In addition to the sophistication of today’s counterfeit documents is the sheer number and variety of valid identity documents in circulation. Not only are there approximately 600 different styles of valid U.S. driver’s licenses, more than 500 different “specialty” driver license style (e.g. “off-road”, “motorcycle”, "commercial vehicle”, etc.), but there are also a multitude of passports, visas, state I.D. cards, military I.D. cards, work-permit and resident alien cards, diplomat ID cards and a variety of different travel identity documents. Multiply that by the number of nations issuing passports, visas, immigration papers, and other identity documents and the problem becomes glaringly apparent. No single individual can be expected to be familiar with all the various jurisdictions, document types, and issuance series of all the identity documents issued worldwide. And even if it was possible, the time it would take to do so manually would result in long lines and wait times, frustrated and angry customers, and harried document examiners.

The Key Features of an Effective Solution

The key to implementing an effective Trusted Identity solution is 1) a comprehensive understanding of all facets of the Document Authentication process and 2) the ability to seamlessly integrate the solution into existing business processes using best practices implementation. In addition, because of the constantly changing landscape that is identity documentation, the solution must also offer an extensive, inclusive document library that is updated on a regular and frequent basis. By meeting these needs, complete Document Authentication solutions allow financial institutions to quickly, efficiently, and reliably authenticate the thousands of different identity documents issued in today’s environments, and in so doing, to have a high degree of confidence that the applicant is presenting a genuine identity.

Comparing the Costs of Subscription-based Services vs. Fraud Fighter's B5000

Online verification solutions are a recurring expense. The subscription model may include monthly fees, per-seat license fees and transaction costs ranging from a low as pennies-on-the-dollar to more than $3.00 per transaction depending upon the level of detail, the volume of searches conducted, the service provider, and the nature of the search.

Considered in entirety, the total cost of ownership (TCO) of the Document Authentication solution, which is a hardware/software purchase enabling unlimited Document Authentications, will over time prove to be considerably lower than the perpetual per-transaction fees associated with online verification services. A recent TCO analysis by a financial institution showed that the costs of the Document Authentication solution was significantly less than the long-term cost of conducting online verifications. Additionally, costs associated with online verification aren’t typically addressed until after the purchase decision, such as branch set-up costs that may require structured financing, or the operational costs of manual entry of ID data into branch systems that could otherwise be automated with Document Authentication.

At 25 verifications per month, the cost of ownership for the B5000 is higher than paying a per-transaction fee for online verification. However, our survey of several businesses has uncovered some significant facts about the costs associated with using online verification services, and reasons why the online services are less desirable.

• Original Setup Cost for Online Verification

• High Failure Rate

• Due to their geographic location, they may have had a higher-than average number of problem-state driver licenses, but the fact is that failure rates will be high with online verification systems.

• Online verification requires the business to print-out each inquiry.                                                              

• Requires making a copy of government issued ID

• Requires scanning ID verification & ID to a network drive

• Unable to view ID

• Manual entry of ID fields to CRM/Branch IT System

The Bottom Line is the Bottom Line

Ultimately, the real and quantifiable value of Document Authentication is the tens of millions of dollars it saves organizations by virtually eliminating losses related to processing accounts associated with fraudulent identities. Applicants attempting to open accounts or obtain credit with fraudulent ID documents are unsuccessful in their attempt, and are either reported to law enforcement or will seek alternate financial institutions that do not perform identity authentication. Often times, this removal of the threat is enough to make the case for investing in the technology because the amount each institution loses each year related to identity theft is tracked as a performance metric.