Data breaches have regrettably become so common that it’s safe to assume that we’ve all had our PII compromised at some point. In order to protect businesses and consumers, we must reconsider the traditional approaches to identity verification that are onerous for consumers and expose enterprises to risk.
Legacy Identity Verification Solutions Give Fake Accounts Easy Access
Opening a new account with stolen PII is easy for bad actors, largely due to the widespread use of outdated customer verification processes. Unfortunately, organizations continue to face several challenges to the process of identifying and onboarding new applicants, including:
1. Stolen PII
Many businesses rely solely on the credit bureaus to verify user identities. This is problematic as the personal information requested in most applications is exactly the same as the information credit bureaus use to verify identities. If a bad actor steals real PII they can open an account, or take over an existing account using that information since it matches the information the credit bureau has on file. Real consumer data that has been compromised can easily be acquired on the dark web. The reality of today’s digital world is that it’s a matter of when, not if, for most consumers.
2. Applicants with insufficient credit history.
In recent years, growing numbers of the population have only a minimal credit history—and despite being qualified, these applicants with “thin files” are more likely to get denied than bad actors using stolen PII. This problem particularly affects millennials, Gen Z, and new-to-country populations, who are all less likely to use credit cards to establish credit. In fact, members of Gen Z have demonstrated a preference for avoiding credit cards by opting for debit cards or utilizing short term buy now pay later (BNPL) solutions that are often not reported to the credit bureaus.
3. Rules-based approaches to customer verification.
The vast majority of identity verification solutions, including those offered by the major credit bureaus, rely on a plethora of rules created by statisticians. Rules-based systems are only as good as the rule maker, however. Additionally, by necessity, rules become more complex over time, and are difficult and time-consuming to update and manage. As fraud tactics shift, as they rapidly do, rules-based systems increase exposure to risk and have a hard time adjusting to the current conditions, which makes organizations that rely on these approaches prime targets for bad actors.
4. Emerging authentication technologies are not a panacea.
Despite their good intentions, advanced authentication technologies, such as biometrics, only work if an account has already been verified. But if the account is opened using stolen PII and verified by a credit bureau, the advanced authentication only serves to further validate fraudulent accounts. Furthermore, given the cleverness of bad actors, even physical biometrics like fingerprints or selfies can be spoofed. These authentication technologies hold promise as a part of a complete identity verification approach, but aren’t a stand-alone solution.
These challenges make clear that relying solely on credit bureaus to verify new applicants is no longer a sustainable model. Too often this data is compromised, static, and has gaps in coverage for emerging consumer segments.
Increase Identity Accuracy with a Graph-Defined Approach
Using an identity graph is the proven best practice for digital identity verification in the digital economy. A graph-based approach provides real-time, predictive analytics for the most accurate and comprehensive identity verification and fraud prediction available. Decisioning performed by single identity element-centric products such as email-centric, phone-centric, or document-centric solutions results in friction in the customer experience, low accuracy, minimal coverage, and high false positive rates.
Socure is the only graph-defined identity verification platform that utilizes every element of consumer identity. Socure’s revolutionary ID+ platform provides complete 360-degree coverage of a consumer, and is natively orchestrated by advanced AI/ML to maximize accuracy, reduce false positives, and eliminate the need for disparate products. The result is the most accurate fraud detection and identity verification in real-time.
In addition to identity verification, Socure integrates an ever-growing, real-time network of intelligence from billions of predictions and actual outcomes from the world’s largest companies. More than 1,100 top financial institutions, government agencies, and other enterprises contribute to, and reap the benefits of the industry’s only identity graph consortium network ensuring known bad actors aren’t able to harm your business.
Are you ready to see how the power of an identity graph approach can bring precision, accuracy and confidence to your identity verification program? Click here to schedule a demo with an expert today.
Matt is the Director of Product Marketing for KYC and Global Watchlist solutions at Socure. Prior to Socure, Matt established and led the product marketing efforts for fraud and identity solutions at TransUnion.