FRAUD TECHNIQUE: IDENTITY DOCUMENT VERIFICATION

FRAUD TECHNIQUE: IDENTITY DOCUMENT VERIFICATION A technique data sheet presented by The Fraud Practice LLC.

Fraud Technique: Identity Document Verification Author: David Montague Identity Document Verification as a risk program technique... 3 What is the market need that Identity Document Verification addresses... 4 How does Identity Document Verification work?... 4 Fraud technique strengths and weaknesses... 5 Where it falls into a risk program... 6 Who/where is it desired in the market... 7 Vendors offering Identity Document Verification... 7 Vendor approaches to Identity Document Verification... 8 Practical application, integration, and complexity... 9 Appendix... 10 Intended solely for the entity who purchased this document and/or was authorized to obtain a copy by The Fraud Practice, LLC. THIS DOCUMENT IS. This document including any transporting email, or facsimile are proprietary and confidential information intended only for the use of the recipient(s) named above. If you are not the intended recipient, you may not print, distribute, or copy this document. If you have received this document in error, please notify the sender by return e-mail or facsimile and destroy this document and any transporting emails from your computer. This technique data sheet is sponsored by IDChecker (www.idchecker.com) 2 Technique Data Sheet Identity Document Verification

Identity Document Verification as a Risk Program Technique Identity Document Verification helps organizations verify a person is who they say they are. Modern services allow consumers to take a photo of their driver s license, ID card, passport, credit card, bank statement, bill or other document relevant for the transaction. The consumer may also take a photo of themselves. Facial features are translated into an algorithm and compared to the image on their ID card in real time. In many cases, vendors also offer a service that can auto-populate sign-up forms through a photo of the ID or statement. Pre-transaction Transaction Post-transaction Fulfillment Reconciliation Identity Document Verification takes place pre-transaction Identity Document Verification seeks to confirm relevant information to a user's identity that may be required for KYC (know your customer), AML (anti-money laundering), and other compliance requirements. It is often used by financial institutions, financial services businesses, and others concerned with these regulatory requirements. It may also be used for businesses that are granting credit, or selling age-sensitive goods or services. Many different types of merchants use Identity Document Verification, although not on every single transaction. It is something to consider for the cases where it can help drive increased revenue while keeping fraud down. These cases include international transactions, and instances where a person cannot be effectively authenticated and verified using traditional methods. Many organizations have performed Identity Document Verification in-house by having consumers fax in documents, but this is often a rudimentary version of the technique compared to services available in the market today. Few organizations will be able to effectively spot forgeries, and the majority of businesses do not have the equipment to decipher barcodes, symbols, and codes. A third party provider can read and process customer s documents, ensuring they re not forged and checking specific document details such as holograms, background printing and micro text. Service providers may also add the security of facial recognition, ensuring the documents aren t stolen. Not to mention, being able to use a cell phone, tablet, or computer makes the process more pleasant for the customer than having to fax or scan and submit their identity documents. Risk Program The Fraud Practice considers Identity Document Verification to be a technique within a risk program s operational tool kit. Operational Tools ID Doc. Verification Fraud Tools Strategic Tools 3 Technique Data Sheet Identity Document Verification

What is the Market Need that Identity Document Verification Addresses? Identity Document Verification has a focus on fraud prevention and is excellent for meeting KYC, anti-money laundering, and other types of compliance, but it is also a sales conversion enabler for merchants, allowing businesses to feel comfortable taking orders where normal verification checks fail. These orders can, for example, be related to good customers who cannot be verified through their phone number or address, and international orders where verification methods typically common in the USA are difficult, if not impossible. Using Identity Document Verification allows organizations to expand their reach with a streamlined workflow similar for all markets instead of using a multitude of routines and services. Identity Document Verification can also streamline the user s experience, particularly on mobile platforms. Besides verifying customers who might not be reached by traditional checks, document verification with facial recognition can be an excellent tool for select high-risk, high-price orders. Most fraudsters attempting to use stolen information online are not in possession of the actual credit card and the person s ID, and asking for a photo can be a good deterrent. Even if they have these items, comparing their photo to the one of the documents will make utilizing stolen credentials nearly impossible. Channel Effectiveness Identity Document Verification is most efficient and needed on transactions where the customer is not present. Online - web Online - mobile Point-of-Sale Telephone Mail Order Superior Superior Average Below Average Below Average 4 Technique Data Sheet Identity Document Verification

How does Identity Document Verification Work? Any camera-equipped device is turned into a data capture tool, allowing consumers to take photos of their ID cards, driver s licenses, credit cards and passports. These standard documents are considered core documents and are widely supported. Most vendors will also support peripheral documents such as bank and account statements, utility bills, insurance cards, non-government issued identification cards, and similar. The vendor may also offer the ability to create new templates to manage other types of peripheral documents that aren t already included. The information is encrypted and processed in real time. A series of automated checks on the identity document are performed to include forgery checks as well check-sums and consistency checks with details in the document such as the Machine Readable Zone (MRZ). The MRZ contains information that confirms data on a passport, such as date of birth, nationality, gender, and expiration date. In most cases, verification takes less than a minute, and the consumer gets a smooth and pleasant online experience. Vendors may also offer manual document checks provided as a managed service, as well as facial recognition and comparison checks to ensure the person providing the document is the true document owner. The vendor may offer services with biometric checks such as facial recognition, which generally look for involuntary movement and blinking to assure the person on the picture is an actual person and not just a photo of another photo. The software extracts key features which are translated to an algorithm to be compared to the algorithm for the photo on an identity document. An additional benefit of Identity Document Verification is automated form filling features through optical character recognition (OCR) that can help users sign up or fill out forms through a picture of their documents instead of typing. Another benefit of OCR is pulling information from identity documents that can be used for authentication with service providers partners, or through third party data integrations. 5 Technique Data Sheet Identity Document Verification

Fraud Technique Strengths and Weaknesses Identity Document Verification gives one fraud flow for many regions of the world. It is excellent for complying with know your customer and anti-money laundering regulations, and great for access to the unbanked, underbanked, and immigrant populations. The technique can also be implemented very quickly. Although third party services make the process of submitting an ID document as easy and streamlined as possible, it can be perceived as somewhat intrusive, and works best when customers are invested in completing a transaction. Fraud Technique Strengths and Weaknesses First Time Fraud Detection Repeat Fraud Detection Account Takeover Application Fraud Internal Fraud Affiliate Fraud 3rd Party Fraud Detection 1st Party Fraud (Friendly Fraud) Detection Sales Conversion (Enhance and Increase) Monitoring Rating Above Average Average Average Above Average Below Average Below Average Above Average Average Average Below Average Where does Identity Document Verification fall into a Risk Program? Independent Multiple Partial Vertical Full Tool Tools Solution Solution Solution Identity Document Verification is a tool, used within a risk program for monitoring and managing fraud pre-transaction. This is a global technique which can greatly facilitate cross-border transactions. 6 Technique Data Sheet Identity Document Verification

Who/where is it desired in the market Verticals drawn to Identity Document Verification include: Those who do international business Financial institutions, credit granting, financial services etc Any business with KYC or AML requirements High-dollar goods merchants Person to person interactions such as Bed and Breakfasts Vendors Offering Identity Document Verification were established in 2004 to verify identities through document verification for legal and compliance requirements. The service has since expanded to improve the accuracy and processing of personal information while serving as an additional step in the detection of identity fraud. They have offices in the Netherlands, United Kingdom, and USA. Their StrongID product performs automated verification and forgery checks on identity documents, including extracting and pre-filling data into web forms with the option to include manual identity document checks while biometric facial recognition and comparison can also be included through their FaceLink product. Jumio were founded in 2010 and have their headquarters in Palo Alto California, but the company has offices in Europe and operates development centers in Linz and Vienna, Austria. Their Identity Document Verification product, Netverify, offers real-time ID verification of passports, driver s licenses, government issued ID cards, utility bills, insurance cards, and bank statements from over 100 countries. It is used by financial institutions, e-retailers, and consumer marketplaces to meet know-your-customer industry regulations and internal policies, reduce fraud and chargeback costs in purchase transactions, and enhance trust and safety in online communities. Company Service Information Name Headquarters Service Information Direct URL Haarlem, The Netherlands with a satellite office in San Francisco, California www.idchecker.com Jumio Palo Alto, California with satellite offices in London, Linz, and Vienna. www.jumio.com 7 Technique Data Sheet Identity Document Verification

Vendor approaches to Identity Document Verification offers easy sign-up forms, document verification, and biometric authentication for mobile and web transactions. Their focus is on reducing fraud and creating a smooth user experience. They have three main products: Easy Onboard captures data for sign-up forms and similar through the customer s camera. It processes personal data and any photos extracted from documents in real time, creating a high-speed form filling experience for the customer. Strong ID allows customers to upload their documents with a cell phone, tablet, or computer, and verifies documents in seconds. If a manual review is required, the response comes back in minutes. FaceLink ties Identity Document Verification to biometric authentication through cloud-based facial recognition. The service works in real time through creating an algorithm to define facial features and comparing these to the image on the person s ID card. FaceLink also uses liveness detection to make sure the photo is of a real person. Jumio offers payments and ID scanning and validation products for mobile and web transactions. Their focus is on reducing fraud and increasing revenue through minimizing friction in customer transaction. They have three main products: FastFill captures data for sign-up forms and similar through the customer s camera. Netverify offers real-time ID verification of passports, driver s licenses, government issued ID cards, utility bills, insurance cards, and bank statements from over 100 countries. Netswipe supports real-time credit card scanning and validation in online and mobile checkouts. Service Features and Coverage Company Name Documents Accepted Data Capture and Autofill Biometric Facial Comparison Countries Covered Core and Peripheral Identity Documents (FaceLink add-on to StrongID) 196 Jumio Core and Peripheral Identity Documents (Included with Netverify) 102 8 Technique Data Sheet Identity Document Verification

Practical Application, Integration, and Complexity Identity Document Verification is a technique merchants can put in place in less than 24 hours in many cases in less than one hour and it is considered not difficult to implement. These services can be utilized by a merchant at any level. Both s and Jumio s products can be implemented into an existing mobile application through a software development kit. Jumio also offer HTML5 for mobile. For website use there is an application programming interface, or access through iframes. Both vendors offer a client portal. Time to Implement: Short Level of Difficulty: Easy Service Integration Information Company Name Client Portal Integration Options Integration Time Technical Difficulty Web API, iframe Mobile SDK Client portal Web minutes (iframe) to hours (API), Mobile SDK varies on level of integration Easy Jumio Web API, iframe Mobile SDK, HTML5 Client portal Minutes to an hour Easy 9 Technique Data Sheet Identity Document Verification

Name Company Service Information Headquarters Haarlem, The Netherlands with a satellite office in San Francisco, California Sales Contact Information Service Information Direct URL www.idchecker.com Jumio Palo Alto, California www.jumio.com/netverify Name Sales Person Phone Number Email Address Chris Montesanti 727-343-1430 chris.montesanti@idchecker.com APPENDIX Jumio Ray Soriano ray.soriano@jumio.com Regions and Channels Name Regional Coverage Channel Effectiveness Global 196 countries Online, Mobile, POS Jumio Global 102 countries Online, Mobile, POS Company Service Information Name Partners Jumio 192business.com, Experian, edentiti, Crif IDology, Vodlo 10 Technique Data Sheet Identity Document Verification

APPENDIX Name Jumio Coverage and Service Usage Information Monthly Minimum/ Volume Minimum No minimums No set-up fees No contract time Pay per verification Monthly plans for usage license with volume caps starting at $795 per month with 12 month contract. Pre-purchase available instead with minimum purchase of 1,000 documents (can be used at any time) Coverage Global (196 countries) Global (102 countries) Platforms and Documents Supported Customers 2 of the world s largest money transfer businesses. Market leader in temp agencies in Europe. Travelocity, Airbnb, Entropay, PokerStars, 5 of top 10 consumer internet companies in Silicon Valley. Company name Platforms Supported Documents covered APPENDIX Jumio Netverify Mobile (ios and Android), Web Mobile (ios and Android), mobile HTML5, Web Core (passports, national IDs etc) and peripheral (account statements, bills, insurance cards etc) identity documents. Will build a template for new documents a client needs to process. Core (passports, national IDs etc) and peripheral (account statements, bills, insurance cards etc) identity documents. Technical Integration Company name Integration Options Integration Time Technical Difficulty Strong ID and FaceLink API or iframe for web. SDK for Mobile Also offers client portal Web minutes (iframe) to hours (API), Mobile SDK varies on level of integration Easy Jumio Netverify API or iframe for Web. SDK or HTML5 for Mobile. Also offers client portal. Minutes to an hour Easy 11 Technique Data Sheet Identity Document Verification

APPENDIX Jumio Service Method Consumers are able to provide images of their identity document and face for verification via web based and mobile platforms for minimal friction. Relevant data is captured and pre-filled into web forms while the identity document is checked for forgery and inconsistencies. Optional features include manual review of the identity document performed by, third party data integration to authenticate data on the identity document, as well as biometric facial recognition and comparison with FaceLink. The task of supplying identity documents is streamlined through capture of the identity document or statement, as well as matching a consumer s face to the image in their Photo ID via a mobile app or web based interface. Data is recorded and filled into web signup, check-out, or registration forms via Fastfill, while identity documents are data filled and verified as legitimate with Netverify. APPENDIX Service Description StrongID performs automated verification and forgery checks on identity documents, including extracting and pre-filling data into web forms with the option to include manual identity document checks while biometric facial recognition and comparison can be included through their FaceLink product. Jumio Jumio offers real-time Identity Document Verification of passports, driver s licenses, government issued ID cards, utility bills, insurance cards, and bank statements from over 100 countries. It is used by financial institutions, e-tailers, and consumer marketplaces to meet know-your-customer industry regulations and internal policies, reduce fraud and chargeback costs in purchase transactions, and enhance trust and safety in online communities. 12 Technique Data Sheet Identity Document Verification

APPENDIX Services and options Jumio Regional Coverage 196 countries 102 countries Offering Type Platforms Supported Automated and manual Identity Document Verification FaceLink adds biometric component Mobile (ios and Android) Web Automated and manual Identity Document Verification with biometric facial recognition comparison Mobile (ios and Android) Web Mobile Capture Option Web/Webcam Capture Option i-frame Solution Data Capture and Prefill APPENDIX Forgery Checks Manual ID Check Option Verifies Passport Machine Readable Zone (MRZ) Checks Passport Background Print / Micro-text Hologram Check Biometric Facial Comparison (FaceLink) White Label or Integrate Document Capture into Mobile App 3rd Party Data Integrations Partners only Response Time Automated checks, seconds to max two minutes. Manual checks, minutes to maximum two hours. Seconds to max 90 seconds, including manual checks. 13 Technique Data Sheet Identity Document Verification

FRAUD TECHNIQUE: IDENTITY DOCUMENT VERIFICATION A technique data sheet presented by The Fraud Practice LLC. Intended solely for the entity who purchased this document and/or was authorized to obtain a copy by The Fraud Practice, LLC. THIS DOCUMENT IS. This document including any transporting email, or facsimile are proprietary and confidential information intended only for the use of the recipient(s) named above. If you are not the intended recipient, you may not print, distribute, or copy this document. If you have received this document in error, please notify the sender by return e-mail or facsimile and destroy this document and any transporting emails from your computer. For updates and modifications to this document, please visit www.fraudpractice.com/course-datasheet-issuer-alerts.html 2014. The Fraud Practice, LLC. All Rights Reserved Subject to Terms of Use available at http://fraudpractice.com/terms.html. The Fraud Practice LLC names and logo and all other names, logos, and slogans identifying The Fraud Practice s products and services are service marks of The Fraud Practice LLC. All other trademarks and service marks are the property of their respective owners. Images Copyright istockphoto LP