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The development of technology and the internet has changed the way many companies conduct their business operations. It helped them reach new markets, attract new customers and transform various aspects of the business. But, with all the benefits the internet has to offer, comes some disadvantages. Cybercriminals quickly jumped on the wagon of technological development and used it to carry forward their criminal activities. Their attacks have become more sophisticated and difficult to trace, putting everyone in danger. Customers are increasingly flocking online to do business with you in an age where convenience reigns supreme and in-person connections are limited. Customers are coming in through your digital front door in greater numbers than ever before, even when we aren’t dealing with a global pandemic. This gives you the opportunity to reach out to new clients who would not have found you otherwise. It can, however, expose you to malicious actors seeking an easy target.
Luckily, cybersecurity sectors have been keeping up with their attacks and developing new ways of keeping businesses and individuals safe from the growing threat. You can use various strategies to secure your business, but ID verification comes tops the priority list, especially when it comes to the industries dealing with financial elements. They help you discover if your customers are original and keep fraudsters away from your business. SEON’s verification method explains how important identity verification is not only in fraud prevention but also for keeping you compliant with necessary regulations. An efficient identity verification system allows your business to avoid various fraudulent actions, such as account takeover, a fake or stolen identity, money laundering, and related activities.
What is Customer Identity Verification?
Identity verification, also known as identification proving, is the process of confirming an end user’s identity to guarantee that their digital identity matches their real-life identity. Customer identity verification’s purpose is to provide your company assurance that a user interacting with your brand is a real person who is who they say they are.
During the initial engagement with a new client, customer identity verification is most commonly used. Registering for a service, submitting an application, or creating an account are examples of these interactions. Because the risk of fraud is significant, the ability to authenticate identification during this initial encounter is critical.
You may request the consumer to authenticate their identity during onboarding, reducing the chance of fraudulent account creation and takeover. You increase security and safeguard prospective victims when you have trust that a new customer is who they say they are. If you work in the financial services business, you may use identity verification to fulfill Know Your Customer (KYC) requirements and comply with the Bank Secrecy Act’s Anti-Money Laundering (AML) laws.
Purpose of ID verification
Customers expect a frictionless experience when making purchases online or via mobile apps, and digital identity verification is an important part of retailers’ arsenal in the fight against identity fraud. It allows them to quickly spot and stop fraudsters in their tracks while providing the frictionless experience that customers demand. Identity verification guarantees that a procedure is being run by a genuine person and that they are who they say they are. This stops someone from acting on behalf of others without their permission, creating false identities, or conducting fraud.
Verification verifies that a label or direct component marking is functional and that codes are readable across the supply chain. Product returns, packaging waste, and other costs are reduced as a result of verification.
How can businesses confirm users’ identities?
Businesses must know who their customers are to avoid any fraudulent actions. Victims falling prey to fraud can have disastrous consequences for a business, not only from the financial side but also reputational. Users identity can be confirmed in three simple steps:
- Identification: Collects and records user data at any time.
- Identity verification: Verifies that provided data are legitimate and that you are not dealing with a stolen or fake identity.
- Identity authentication: Confirms there were no changes and that verified data stays consistent each time a user comes to your site.
To ensure nobody takes advantage of your user account, identity authentication needs to be repeated when necessary, such as when a user accessing your site from a different device or unknown location. Multi-factor authentication can be extremely useful in this step, as it offers an additional layer of security.
Why is identity verification essential for securing your business?
Cybercrime is on the rise, and it doesn’t like it will stop growing any time soon. More and more businesses and individuals are in danger of becoming victims of an attack, and it is the end time to start fighting back. The best way to protect your business and its customers is not by reacting to fraudulent actions, it is preventing them from even happening.
It helps you stay compliant
Various governments and industries have certain regulations businesses need to comply with to conduct their business. By conducting ID verification, you are ensuring that you are offering your products or services only to individuals legally able to use them. This is important in all industries, but it is essential in the gambling or lending industry.
Every time a customer accesses your business, they are putting their trust in you, and they believe you will keep their personal information safe. To keep your customers, you need to provide them with a secure environment. Knowing more about your customers allows you to notice the patterns in their interaction with your site and help you recognize any red flags that might indicate the fraud attempt. For example, a clear red flag would be if your user has always been accessing your site from the same IP address, but suddenly they are trying to connect from a completely different one or if they are trying to access it from another country. In this instance, you can request your user to authenticate their identity and confirm they are who they say they are. This can prevent account takeover or identity theft while causing minimal user friction.
Reducing the danger of financial fraud
Being a business owner means dealing with all the good and the bad, and unfortunately, financial fraud is as bad as it gets. Implementing identity verification will deter criminals whose intent was financial fraud, such as money laundering or card-not-present fraud.
E-commerce has exploded over the last few years. As a result of the pandemic, internet sales increased significantly as people stayed at home. Many consumers shopped for necessities more frequently or for the first time, utilized online grocery services, or ordered food via delivery applications. According to the United Nations, over one-fifth (19%) of all retail purchases are now made online, with more than 23% in the United Kingdom. Due to the growing prevalence of identity fraud, the e-commerce industry has had to step up its efforts to verify that transactions are safe and that consumers are real.
Fraudsters will use a larger range of increasingly sophisticated approaches as of 2021, leaving merchants feeling unprepared and vulnerable. Synthetic identity fraud, which blends actual and bogus consumer information to create a new identity, is a fast-growing problem that many online stories are concerned about. Online businesses must change their strategy to ensure that customers and transactions are constantly safeguarded. Increased use of real-time data and machine intelligence can assist internet companies in combating identity fraud at scale while guaranteeing the best possible user experience.
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