While 2020 brought an end to a decade full of technological advancements, it was only the start of some world-altering events. From the coronavirus (COVID-19) outbreak to staggering climate change, 2021 has continued on the risks and trends from the recent past to bring us a world never seen before. Read out Why It Is More Important Than Ever To Have Identity Proofing on Your Website.
But apart from existential threats that are currently being mitigated, the day and age have also given way to a variety of security breaches that are particularly common in the online world. In addition to establishing highly secure payment methods for their customers, businesses now employ several mechanisms to ensure that they are dealing with the right person in the first place.
That is where identity proofing comes into the picture.
By deploying purpose-built tools that are able to verify the identity of online users, your business can steer clear of a world of problems. From ensuring fraud prevention to enhancing client trust, the approach can help you across a variety of fields.
To see why it is important to put these measures in place, here’s a lowdown on identity verification and its various benefits for modern businesses.
What is Identity Proofing?
Identity proofing entails the approaches adopted by a website or application developers and owners to identify the parties allowed to access the application. At its core, identity proofing embraces knowledge-based user features, wallet-based factors, national identity algorithms, and document verifications to assess whether the individual logging into the system is who they claim to be. This process gives the user the opportunity to initiate self-verification, which leads to a secure authentication mechanism that’s devoid of elements that may compromise user experiences.
Authentic bodies like the National Institute of Standards and Technology (NIST) have embraced comprehensive guidelines for identity proofing in computer systems. NIST uses this three-part process to verify the metrics for matching an individual’s claimed identity:
Identity resolution– This involves the exclusive distinction of a user’s identity in the dimensions of the population or system under consideration
Identity validation– Here, identity proofing is initiated by collecting the necessary pieces of evidence from the individual then vetting its level of authenticity, validity and accuracy.
Identity verification– In this phase, the system initiates a confirmation protocol to verify that the person is truly who he claims to be.
Other identity proofing systems may embrace this five-step process to authenticate the identity of the system users:
Validity- This involves the confirmation that the evidence provided by the user is genuine.
Strength – In this case, the pieces of evidence concerning the user’s identity are gathered in the form of documentation. The documentations used here must be internationally recognized with the necessary security features with the relevant strengths.
Verification-This involves verifying that the identity presented actually belongs to the individual claiming it. This step is made simple using robotic knowledge-based questions and tasks.
Activity– Confirmation of the existence of the identity under consideration using bills and transaction records
Identity fraud– Here, the system seeks to determine whether the identity under consideration could be at risk by initiating comparisons with other sources like the national fraud database.
Why Is It Important in the Current Day and Age?
The present-day cyberspace environment has led to a significant reduction in the traditional boundaries between one’s real-life physical identity and the corresponding digital identity. As such, identity proofing mechanisms have played a crucial role in helping both organizations and individuals to secure themselves and their end-users from ever-evolving cybersecurity threats.
Here are the reasons why identity proofing is essential to both organizations and individuals.
- Identity proofing helps businesses meet the KYC conditions set by the regulatory agencies.
- Know your customer (KYC) is a mandatory requirement for many institutions in the financial sector.
- Identity proofing presents such organizations with an ample avenue to collect and prove their clients’ ID data any time they log into the institutions’ systems.
- Identity proofing fosters strong customer authentication that seeks to improve the checks compared to the stolen authentication elements.
- Proofing aids digital credit scoring – Institutions (primarily financial) like loan providers use their identity proofing systems to structure their user profiles by considering the user IDs. Identity proofing comes in handy to minimize mismatches and possible frauds.
- A great anti-money laundering tool- The documentary verifications needed in identity proofing make it an essential element in anti-money laundering checks in forex trading and iGaming.
- Very effective in fraud prevention- Proving your clients’ identity is one of the key ways of flagging potential fraudsters. This will limit fraudulent operations like chargebacks and identify strange online traits like massive deposits and withdrawals.
- Proofing helps businesses to avoid the enormous costs associated with various risks.
What are the Risks of Not Having These Tools in Place?
Can you imagine a business that does not care about the identity of the clients it serves or a financial system that lacks the necessary identity proving layers?
Honestly speaking, the business entity and the overall system would be a total mess if there were not high-quality and standardized identity proofing systems. Here are the risks of not having proper identity proofing systems in place:
- Increased chances of data breaches- Companies that lack practical identity proofing tools are most likely to report frequent customer data breaches.
- Loss of trust- Clients tend to lose trust in businesses/institutions that are vulnerable to data breaches. No one wants to put critical personal data at risk because of a care-free institution.
- Poor reputation- Identity proofing makes every party accountable for their actions in any transaction. Organizations that lack effective verification systems are most likely to get inappropriate customer reviews, lack of trust, and an overall poor reputation in the public’s eyes.
- Costly fines- Organizations of great repute have been taxed with fines amounting to billions of dollars for their inability to adopt effective identity proofing systems. Such fines can only be avoided by adopting identity proofing mechanisms such as KYC and AML systems.
- Vulnerability to fraud and money laundering challenges
- Exposure to costly chargebacks
How Does the Measure Help Your Business?
A 2020 study revealed that an average company was most likely to face 22 data breaches in a year. In essence, most data breach issues arise from deficient identity cushioning systems and may increase fines, fraudulent operations, and identity thefts. Similarly, a 2019 study revealed that companies lose up to $17 billion in identity fraud cases resulting from ineffective identity proofing systems.
These high costs explain why businesses will always be wise to install efficient identity proofing mechanisms in their operations.
Here’s how identity proofing measures will help your business:
- Identity proofing will help your business to minimize the potential for fraud by providing a clear picture that will enable a business owner to determine with greater confidence whether the client is who they claim to be.
- It will give you a platform to offer streamlined services by enhancing the underlying identity verification pass rates as you’ll be sure that you’re serving the right customer.
- Businesses are most likely to improve their levels of trust and reputation among their customer segments by adopting identity proofing mechanisms.
- You will avoid costly fines associated with fraudulent operations, data breaches, money laundering, and other criminalistic operations that revolve around identity theft and assuming multiple identities.
- Businesses are better placed to avoid costly chargebacks by implementing effective identity proofing operations. The company won’t have to grapple with transactions canceled because of fraudulently acquired credit cards by adopting identity proofing mechanisms.
- Improved customer experience- Frictionless identity verification systems allow clients to enjoy the services offered by a business. They’re not taken through an arduous screening process if the identification data needed can be obtained in other places.
How Can You Employ the Practice on Your Website?
It’s always a great idea to adopt extra security layers on your website, mainly if you’re dealing with sensitive pieces of data.
Here are the most effective ways of employing identity proofing on your website.
Multifactor authentication- It’ll help you minimize identity breaches by requiring registered website users to verify the claim of the account using two of these methods:
- SMS authenticator applications
- Email messages
- Automated phone calls
- Dynamic security questions
- Regulated password resets– A great identity proofing mechanism that gives your system users the mandate to update their passwords at regular intervals as a way of avoiding phishing.
- Blacklisting– This involves banning accounts with suspected address domains and disallowing them from accessing your website
- Brute force lockout– The website, in this case, sets a threshold needed for login attempts then determines the next course of action after exceeding the limit set.
- Adopting a password policy– Your password policy must include character length and complexity to minimize forgeries.
- One-way hashing– This feature allows you to encrypt your system users’ passwords by applying customizable hashing salts. In this case, one-way hashing only allows the opportunity to encrypt and not to decrypt the associated passwords.
- CAPTCHA– This identity proofing mechanism will restrict bots from reproducing user accounts and interacting with your website. It comes in handy in ensuring that only humans use the website.
Identity proof methods are quite important in this day and age and contributes to peace of mind, minimal issues with regulatory bodies, and other agencies. Ensure to implement it within your organization for the best results and defend against various threats.