How to Use ID Verification Technology Safely

ID verification software has been around for decades and is now an essential part of any digital transaction. As a real estate professional, you may be thinking about implementing ID verification software to secure your clients’ transactions (if you haven’t already). 

Although this technology is vital to fighting fraud, your clients may want to know how they can be sure that their information is protected and that their privacy won’t be violated if they upload documents containing sensitive personal information. Let’s dive further into this topic and discuss both the positives and the risks of using ID verification.     

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Why Is ID Verification Necessary? 

According to the FTC, Americans lost a record $10 billion to fraud in 2023, increasing almost tenfold since 2013. Real estate, in particular, has become a target, with $446M in losses reported annually to the FBI. Though there are more tools on the market that fight fraud than ever before, cybercriminals find and exploit loopholes in new technology to deceive customers. New technologies, especially automation and bots, have actually made it easier for fraudsters to commit crimes undetected. With fraud on the rise, it’s imperative to put systems in place to protect real estate transactions, like ID verification. 

In real estate, we’ve observed a rise in seller impersonation, with 54% of real estate professionals experiencing at least one seller impersonation fraud attempt between April and October 2023. Another 77% have seen an increase in seller impersonation fraud attempts within the same period. Now, it’s easier than ever for fraudsters to pretend to be someone they’re not.     

It’s up to you to implement new technologies like ID verification into your real estate transactions to prevent yourselves and your clients from fraud. ID verification creates a powerful fraud deterrent through a system of checks and balances in which an individual has to prove their identity beyond a doubt. By implementing robust verification measures, you can take a proactive approach and ensure that only authorized individuals are participating in transactions, protecting you and your clients from potential harm and financial losses.

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How Safe Is ID Verification? 

Most ID verification software uses encryption algorithms to protect your clients’ sensitive data. When implemented effectively, these algorithms guard customer information from the time it’s uploaded to when it’s deleted. Encryption works as a lock and key; only an authorized party who holds the key can access the data. If information is intercepted by fraudsters, it’s incomprehensible and unusable. Breaking the key is nearly impossible because of the large amount of time and processing power needed.

Another layer of safety comes from the fact that ID verification providers are required to comply with regulatory standards. These standards aim to secure personal data and prevent fraud. Mandatory compliance makes sure that software providers are at least checking these boxes.

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Are There Risks to Using ID Verification?

While ID verification does make real estate transactions safer, there are still risks to consider, as there are with any technology. We’ll examine three of the biggest challenges.  

Data Privacy and Protection 

One of the biggest questions you might hear from buyers and sellers is what happens to their information during and after the ID verification process. They may be concerned that their digital IDs, such as virtual versions of driver’s licenses, could be used for other purposes they didn’t authorize. IDs are incredibly valuable pieces of information, and technologies that store them in a central location could also attract hackers. Given the automated nature of ID verification software, there’s a much smaller window of opportunity to detect and stop fraudulent behavior. If there isn’t a sufficient level of transparency about how personal information is stored and protected, clients may resist using ID verification.

There are laws, such as the California Consumer Privacy Act and other state privacy laws, that ensure people have rights to their own data that is collected by companies. Under these laws, consumers can send requests to delete data, correct data, and access a copy of their data. There is also growing momentum for state-level privacy laws, and practices like transparent data collection, explicit consent, and data removal options are becoming standard. For a complete list of state privacy laws, visit the International Association of Privacy Professionals’ US State Privacy Legislation Tracker.     

False Positives & Negatives 

Though largely accurate, false positives can occur when ID verification inaccurately identifies that an ID and the person holding it do not match, incorrectly identifying a threat when there is none. Some selfie verification systems have failed to identify users properly, which can lead to them being locked out of their accounts. False positives are frustrating for both companies and consumers. It takes additional time and resources to solve the problem and to confirm if the false positive is actually legitimate. It can ultimately result in loss of business if the customer becomes too frustrated and abandons the process altogether. 

False negatives are an even greater concern. They occur when there is fraudulent activity, but it is not detected by the ID verification software, and fraudsters are allowed to continue with a transaction. The good news is that this usually only occurs when there is something wrong with the software, such as it being inactive or not up-to-date with the necessary capabilities. But if it does occur, the results can be devastating, usually resulting in financial and reputational losses.

Having examined both the positives and negatives of ID verification, the question remains: Is it worth it to have ID verification software? 

Should You Use ID Verification?

The answer to this question is a resounding yes because ID verification has become an essential part of fraud prevention measures. if you don’t use ID verification, you’re leaving yourself and your clients open to a lot of risk. 

Impersonation is a key component of many types of fraud, so the ability to establish the identity of key parties in a transaction early on can go a long way to help prevent fraud.

It’s also important to keep in mind that for most real estate transactions, the identities of buyers and sellers are legally required to be verified, so having ID verification software may already be necessary to stay compliant in some states.  

The key is choosing the right software provider. That’s where CertifID comes in. Our new ID verification feature, Match, verifies identity by checking that an individual’s ID document is real and that the ID matches the person holding it. Match provides a consumer-friendly option to verify identities quickly and flexibly, making it easier to protect your business from fraud.

We take security seriously and have instituted several policies and practices to make sure your data remains safe.  

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How We Keep Your Data Safe

1. Maintain SOC 2 certification: SOC 2 — or Service Organization Control Type 2 — is a cybersecurity compliance framework that specifies how a company should manage customer data. It requires a year-long audit of systems and processes to ensure operational effectiveness. We’ve proven through multiple checks over a year that our data security processes and incident and response plans meet their intended purposes. 
2. Partner only with trusted vendors: We check vendors’ security practices thoroughly before teaming up with them. We only work with vendors with a proven track record of maintaining high-security standards.
3. Pressure-test our action plan: Not only do we have a documented action plan, but we’ve put it to the test to ensure its effectiveness. By pressure-testing our plans, we can make sure that we’re protected and adequately prepared to protect your data should anything happen. 

You can expect a commitment to security from us. We take it seriously and are always improving our standards as new best practices and technologies emerge. 

To learn more about how Match can protect you from fraud, contact us for a demo.