Identity (ID) verification is a really simple process when done in person. All that is needed is a photo ID. Then, the identify verification checks hair color and age after the ID document is run under purple light to guarantee it is real.
When ID verification has to be done online, things get complicated. It is not at all easy to verify the identity of a person because you cannot physically check the ID card and whether or not it matches the individual. Fortunately, ID checks are much better now than they were in the past. Even so, the process is not perfect.
Generally speaking, identity verification follows these steps in an online environment:
Verifying That The Person Actually Exists
The goal is to verify that there is actually a person with the applicant’s name, social security number and address in real life. In order to do this, most of the identity verification systems use the big credit bureaus: TransUnion, Experian and Equifax. These can look for identity matches in the repositories they have of credit data for customers.
The cheapest and fastest possible way to do the verification is to call the credit bureaus. However, those that have a thinner credit file, like the young people or the recent immigrants, cannot be checked. In order to address such a situation, various companies offer special services that look for matches through the use of alternative data sources. This includes phone bills, utility bills, rental payments, property deeds and numerous other public records.
Lending and account opening stand out as the main regulations that require ID verification. The best system performs both mandatory and perfunctory checks as they try to look for the identity match.
Verifying The Actual Identity Of The Applicant
In an online identity verification, the second step is always to verify the fact that the applicant is actually who he/she claims to be. This is normally done through authentication questions, which are commonly referred to as “out-of-wallet” checks.
The reason behind the checks is similar to providing credit card signature or debit card pin number, with the goal being that the user is not someone that stole the identity of the rightful users. The questions are usually initially asked when an account is opened. They are really similar to what is asked when using online banking services and all other sensitive services. However, answers and questions are chosen by the account holder.
Third-party data will be utilized to generate some questions that have answers you cannot find in wallets. Due to the random nature of the questions, they can be imperfect. In cases, they are created with the use of the wrong data. Some questions can also be really difficult to remember the answer to.
While the systems used for identity verification are in no way perfect, you do not want to end up faced with substandard methods used. This can easily lead to vital identity and account data landing in the hands of dishonest individuals. Online identity verification needs to be as advanced as possible.