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Over the past decade, wireless carriers have witnessed a collision of opposing trends: consumers’ decreasing tolerance for account opening friction and fraudsters’ increasing expertise in portraying themselves as legitimate applicants. Recent data breaches and synthetic identities have caused a spike in fraud threats. According to Javelin Strategy & Research, the number of cell phone account fraud victims increased 63 percent in 2017. The Federal Trade Commission also reports that the number and frequency of phone account hijackings is increasing due to identity theft. This involves a criminal taking over an already established mobile phone account, buying expensive new smartphones, then selling them and disappearing, leaving the legitimate account owner stuck with the bill. This type of fraud often involves the use of fake identification to make the additional purchase — a driver’s license with the victim’s name and the thief’s photo. With the proliferation of data breaches in recent years, a substantial amount of personally identifiable information, often relied on by knowledge-based authentication (KBA) tools, has been exposed online and made available to fraudsters. As a result, traditional forms of authentication that ask a series of questions to verify a consumer’s identity, such as KBA, are no longer effective at preventing identity fraud. Ironically, in many cases fraudsters are more accurate when answering KBA questions than the consumers they pretend to be. It’s clear the industry must continue to look for new ways to fight fraud while balancing customer experience. Photo Capture Adds Another Layer of Security Photo-capture solutions designed for identity verification allow consumers applying online to take a photo of their driver license (or other form of government-issued ID), to capture and extract personally identifiable information (PII) from the document and convert it to the application. By reducing the amount of data entry required in the account opening process, this helps to address the challenge of quickly processing customers at account opening, add-a-line or upgrades, while managing risk. The process is similar in-store where an associate can take a photo of a consumer’s ID to significantly reduce the amount of personal information a potential applicant needs to manually provide. Photo-capture identity verification is a great tool and an attractive option for carriers because it is relatively low-friction and can easily serve as a step up in authentication both online and in-store. It is accurate and secure, with few limitations. A Valid Driver’s License Isn’t Enough Advancements in counterfeiting technology make fake IDs more difficult to detect and the criminals that produce them have become experts at replicating every security detail, even down to the holograms used by the issuing state. While the visual elements of a fake ID may appear to be in order, often the identity information on these IDs has either been manipulated or completely manufactured. Robust identity checking is essential to verify both the document and the identity associated with the document to provide a more comprehensive level of authentication. Accessing all the potential benefits offered by photo-capture technology without exposing your organization to increased fraud risk requires solutions that utilize a data-driven authentication process. Today: The Need to Rapidly Leverage the Power of Big Data Although it’s important to verify the document in the photo-capture process, document verification alone is not fool-proof. Many photo-capture solutions focus on validating the document and look for signs that an ID may be counterfeit such as visual verification of images on the document and bar code extraction, but they stop there. This can create ‘backdoors’ for fraudsters who are skilled at impersonating identities. A limitation of image-based verification is that many fake IDs can pass photo-capture technology checks because they are from a state not compliant with the REAL ID Act (an Act of Congress that called for the standardization of all state-issued driver licenses and ID cards with improved document security features). As identity verification technology has improved, fraudsters are actively using more convincing fake IDs, and the fake ID industry is booming. Entire businesses have been built solely to produce thousands of “super fakes,” a term used to denote high-quality fake IDs. The sheer volume of counterfeit IDs available today means photo-capture technologies must go beyond assessing the documents to provide comprehensive authentication of the identity asserted on the ID. In one use case, our team examined data from an applicant at a wireless service provider whose driver license conformed to all known templates from the issuing state. However, the driver license number extracted was previously also used to conduct 40 transactions by seven unique identities. These identities had different sets of PII, different photos, and were generated across five states using the license format of each issuing state. Had the wireless provider had this additional information at the time of application, it would not have approved this consumer for their service. This is one example of a high-risk customer that can be identified by using a document authentication process that looks beyond the license format. Carriers that apply a data-driven approach to document verification can potentially reduce their incidence of first-party and third-party fraud because they are able to identify more counterfeit documents and stop fraudulent accounts from being opened. Additionally, one of the latest data-driven technologies for photo verification is advanced image matching which compares the photo on the license to a database of known driver licenses and confirms a match of both the photo and the PII asserted on the document. If the photo and PII don’t match, or the photo appears on numerous licenses, this indicates likely fraud. A Data Driven Solution While photo-capture technologies present a compelling way to simplify the account application process and shore up defenses at origination, the data clearly shows an authentication gap exists for photo-capture solutions that strictly verify a document, while ignoring the identity information associated with that document. A comprehensive data-driven strategy examines both the document and the identity, helping to protect their customer experience — and their business. A comprehensive photo-capture solution: — Analyzes both the document and the individual identity elements on the document to assess whether the asserted identity elements indicate suspicious behavior and or have a history of application fraud — Uses image matching via a license photo database to determine if the photo is tied to other IDs — Runs the license number and other driver license data against a database of known fraudulent database — Returns full customer information, including social security number, email and phone number, which aren’t present on the document to reduce data entry and provide a more seamless applicant experience — Provides authentication insights in near real-time to reduce wait time and friction across any customer channel The key defense is to pair cutting-edge photo-capture authentication technology with advanced analytics and identity expertise to execute data-driven identity verification — ensuring fraudsters need more than a “super fake” to find their way into a wireless carrier’s business. Aaron Kline is VP of product management at ID Analytics.

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