Identity Authentication Program Increases Profitability

 Does your business handle in-store credit applications? Are you verifying the identifications of the applicants when they apply for loans? How are you verifying credit applicants’ identification? These are all valid questions you should be asking yourself if your business issues store credit on a consistent basis.

Recently we were approached by a customer, who was in need of a solution for verifying the identifications of their loan applicants.

The Particulars

The customer is an electronics retailer who was seeking a solution for verifying identity documents because they were having issues with applicants who were applying for credit using stolen identities. A typical credit applicant applied for a credit account with a credit limit in the range of $2000 to $5000. The retailer experienced a “large number” of cases where credit applications were made by identity thieves. That is, someone who had purchased or directly stolen identity information about another individual. The perpetrators would prepare fraudulent loan application documents, and walk out the door with TV’s, computers, stereo systems and other expensive electronic equipment..

These types of losses created friction between the retailer and the underwriter of the consumer credit program – in this case, a large, internationally recognized financial institution. 

The Solution

FraudFighter allied with the retailer and their lender, proposing a solution that would benefit both parties by diminishing these types of losses. We suggested an identity document authentication solution that would enable the store employees to authenticate driver license documents at the time the credit applications were being submitted.   The product we proposed was the FraudFighter ID-150. The ID-150 is an image-capture & authentication device, which conducts high-level forensic authentication on driver licenses and ID cards. It takes high-resolution images of the driver license, scans logos, patterns and printed infrared features that should be present in specific areas, and then compares those verification points to its ID verification database for mismatched or falsified elements.

A limited pilot roll-out into 12 stores was conducted.  During the first 30-days of use, 11 fraudulent driver licenses were detected.  With the historical average credit fraud equaling nearly $3,200 per case, the HARD COST SAVINGS associated with the 11 transactions that were prevented more than paid for the cost of the equipment.  However, hard costs are not the only losses experienced by organizations when a fraud event occurs.  According to the True Cost of Fraud report released by Lexis-Nexis every year, the actual costs, including the SOFT COSTS (such as, investigations, audits, interviews with employees, time spent resolving the fraud with the lender, and time spent dealing with law enforcement), actually totals more than THREE-TIMES the hard dollar cost. 

The Results

As a result of the losses that were deferred during the early pilot project implementation of the ID 150, the retailer convinced their lender  to not only pay for the ID-150 equipment, but also to grant them favorable rates on the loans – allowing the retailer to realize slightly higher margins on the loans they originate in their stores. Perhaps this is a new loss prevention program that retailers should start implementing because it is not only the retailer that is affected by such losses - the underwriter also is exposed to credit fraud.

Does your business issue credit?  Do you have a process to verify identities or are you suffering from losses incurred from loans that are approved under stolen identities? Car dealerships, furniture stores and electronic stores are just a few of the types of business that- would benefit from verifying the identification of credit applicants.

Simply verifying the identification of a credit applicant can save the business and the underwriter from losses that may occur due to stolen identities. The FraudFighter ID-150 has been proven to be a valuable solution for verifying ID documents of loan applicants. The ID-150 is simple and easy solution for verifying identification documents.  Implementing such solution would increase profitability, reduce fraud, increase safety in your stores, and send a signal to the bad-guys that you are not going to sit back and be victimized.

Please feel free to reach out to us to learn more about how this solution could be integrated into your locations.  Also, we would be more than happy to approach your consumer credit underwriting partner on your behalf and broach the subject of having them pay for the equipment and/or provide you with preferential lending terms.