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Identification Verification; A Simple Tactic to Prevent Fraud Losses

Alisha Acosta
    At some point, every business should ask itself, “What is the easiest way to prevent fraud from occurring at my business?”
What if there was one technique that could be the ultimate fraud prevention method? 
Well there is.
According to The Fraud Practiceidentification verification is the lowest common denominator in risk management. “(Montague) Verifying the identification should be the first step that every store owner should have in place in order to prevent losses due to fraud. ID verification is the ultimate risk management technique.  However, many businesses may overlook this prevention step because it seems like a strategy only suited for financial institutions.
Stated simply, ID authentication is a fraud-prevention method that can almost always provide a conclusive signal of risk as long as the consumer has a form of identification or other document that can be accepted for verification. In this context, organizations can rely on identity document verification even when other risk management checks are unavailable or just aren’t providing results that enable the merchant to feel confident in their decision of how to handle the transaction.

Protection for the Merchant:

Verifying the identity of the consumer provides a wall of protection for the merchant. Document verification as a requirement when transactions are conducted works as a check and balance system. When requiring an identification document you are:

  1. Verifying that the document  is authentic , and,

  2. Ensuring that the consumer’s information is valid, which,

  3. Deters fraud from occurring by frightening away prospective fraudsters who see document verification occurring at the POS

Verifying the actual identity document that is presented by the customer is a preventative method against losses that can affect public-facing retail, hospitality and financial service operations in numerous ways.  Just a few of the methods fraudsters may attempt to profit from ID fraud include:

  1. Credit Card fraud, where an individual uses a stolen or counterfeit credit card

  2. Return fraud, where an individual returns goods for cash refund or store credit and uses a stolen identity to log the transaction

  3. Financing/Credit fraud, where an individual applies for in-store credit using a stolen identity.

  4. Account fraud, where an individual attempts to access assets or benefits held by the merchant by presenting fake ID documents

There are ways in which the identification document can be verified for its validity. For example on the US passport, driver license, and passports there are various security features that are evident on each document.  Making sure these features are present on the identification document is one way to ensure that the customer is not presenting you a stolen identity.


Customer Credentialing Whitepaper To learn more about Identification Authentication and download our white paper Customer Credentialing click here





Build Data on your Customers:

Additionally, by verifying the identification document of the customer this provides the business with valuable information about their customers. By requiring the consumer to present a form of an identification document, and if the merchant is using ID authentication equipment that digitally captures ID data, then the merchant is able to gather information about the consumer. For example, an identity document, such as a state-issued ID or a passport or driver’s license, provides the merchant with the consumer’s full name, address, birthdate and nationality.  This is a way to track the consumer or keep a record of who has purchased what. This data can be stored by the merchant in a manner which allows them to use the information to build a profile of the customer.  The merchant can then reference the information for future marketing and promotion.

In the long run, implementing a solution that will verify the identification document as valid will pay off. There are technologies that are efficient in helpings merchant verify the authenticity of an identification document.  For example, here at FraudFighter we offer two identification authentication technologies, the ID-150 and the Penta ID-Scanner.  These two technologies have greatly aided our customers in verifying  the identification of their customers and in preventing losses suffered from identity theft. The ID-150 is a technology that is a single step process in which the merchant can scan a state -ID or state issued Driver’s License and detect for logos, patterns and infrared markers that should be present in specific areas of the identification document.  It then compares these elements with a database off state issued ID documents to authenticate whether the document is valid.  The Penta ID-Scanner is a technology that is designed for both Driver License and larger identification documents such as Passports. This technology scans the passport and compares it against a database to determine the authenticity of the document.   To learn more about our identification authentication technologies click here.

identification authenication products

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