How Identity Verification Services Work: A Comprehensive Overview

In many industries, it’s essential to know who your online and offline customers are. Regulations even require businesses to verify customer identity before providing them with products and services. Fortunately, automated online ID verification services make it easier than ever to confirm someone’s identity. Here’s what you need to know about the latest advancements in identity verification.

Identity verification is the process of confirming that a customer, service user, job seeker, or other individual exists in the real world and is who they claim to be. Businesses rely on identity verification to prevent fraud, support regulatory compliance, and develop trust in their organizations.

In the 20th and early 21st centuries, identity verification involved manual processes, like examining a photo ID or cross-checking information across multiple databases. Today, digital online identity verification services, like Checkr, enable these processes to be completed more quickly.

Digital identity verification services vary slightly depending on the type of online ID verification performed, but most typically follow four key steps: data collection, data analysis, decision-making, and reporting. Here’s a look at each step in a typical identity verification process:

The process begins when the user provides their personal information, such as their name, date of birth, phone number, physical address, and email address. The user may also provide images, like a photo of a government-issued ID and a selfie, for comparison.

Once submitted, the data is sent through an application program interface (API), a technology that enables communication between the user-facing application (a website or an app) and the identity verification software.

After receiving the data, the identity verification tool analyzes it. The specific checks depend on the type of identity verification used. For example, an online identity verification service that confirms personally identifiable information (PII) may compare the user’s input with information from trusted databases. Thanks to automation, data analysis typically happens in seconds.

Based on the results of the analysis, the identity verification service makes a determination using a distinct set of rules and criteria. The API then sends the decision to the original application.

Finally, the original application receives the report from the identity verification service and displays the result. Depending on the service, this might be a simple pass/fail or a trust score indicating the likelihood that the user is who they claim to be.

When identity verification is embedded into a website or app, the user may be unaware of these steps. Automated workflows run in the background, allowing verified users whose identity has been positively confirmed or who have a high trust score to continue onboarding or account creation without interruption.

If a user’s identity can’t be verified, organizations can customize the system’s response—such as displaying an error message, offering customer support instructions, or prompting additional verification steps.

Online identity verification can include document authentication, PII verification, biometric and facial recognition, and behavioral and device intelligence. Here’s how each one works:

With document authentication, users upload official identifying documents such as a U.S. passport, state-issued driver’s license, or photo ID card. Using AI and machine learning, the identity verification system examines the images for signs of fraud.

The tool identifies the document type and checks for inconsistencies typical of forged IDs. For example, if a user presents an image of a U.S. passport card, the system may flag issues like a blurry or mismatched secondary image, missing microprinting, or an incorrect holographic U.S. Department of State seal.

A personally identifiable information verification check compares information provided by the user, such as date of birth and email address, to information contained in databases. These may include credit bureaus, utility companies, government agencies, and other institutions.

The online ID verification service compares the information provided by the user with the data found in these databases. This type of identity verification helps determine whether a user exists.

Biometric identity verification uses unique physical traits, such as fingerprints or facial features, to confirm identity. With facial recognition identity verification, users are asked to take a selfie and submit it along with an image of their photo ID.

AI liveness detectors confirm the selfie is of a real person rather than a static image or deepfake. Then, the identity verification service compares the live selfie to the image on the photo identification to confirm if the user matches the person depicted on the ID.

Behavioral and device intelligence identity verification analyzes signals related to how a user behaves and what device they’re using. It can be used alone or in conjunction with other methods, such as PII verification, biometrics, and document verification. Techniques include:

When identity verification is embedded into a website or app, the user may be unaware of these steps. Automated workflows run in the background, allowing verified users whose identity has been positively confirmed or who have a high trust score to continue onboarding or account creation without interruption.

With behavioral and device intelligence, the identity verification system examines all or some of the above signals and then typically reports a fraud score. Organizations can use this score to identify high-risk users and transactions.

Identity verification offers clear advantages but also presents some challenges. Here’s a look at the primary benefits and potential pitfalls organizations should consider when implementing an identity service.

Fraud prevention and security: Identity verification helps reduce fraud by confirming that a user exists and is who they claim to be. It can detect information associated with fake online profiles, identity theft, account takeovers, and other types of fraud to enhance site security.

Regulatory compliance: In regulated industries, identity verification plays a crucial role in supporting compliance efforts. For example, the Financial Crimes Enforcement Network (FinCEN) requires banks and securities brokers to follow Know Your Customer (KYC) procedures to combat money laundering and financial fraud. Online identity verification can help financial institutions fulfill these obligations efficiently and effectively.

Faster onboarding: Automated ID verification services significantly speed up the onboarding process compared to manual checks. This reduces friction for users and allows platforms to capture interest when potential users are more engaged, helping them grow.

Trust building: Utilizing an identity verification service can help foster trust in your organization. By demonstrating that your platform prioritizes security, you can build confidence among users and stakeholders.

Privacy concerns: Identity verification involves collecting sensitive personal data, which must be handled responsibly. Organizations should disclose their verification practices in their privacy policies and avoid collecting more information than necessary. If, however, the verification involves processing biometric data, organizations must disclose the use of this technology, obtain the user’s consent, and have certain policies and procedures. Otherwise, the organization risks noncompliance with certain state biometric privacy laws. With Checkr Trust, PII verification is typically executed using information that users already provide, such as their name and email address.

User friction: Poorly implemented verification tools could detract from the user experience. Technical limitations may also deter users and hurt conversion rates. Choosing an identity verification service with seamless integration, like Checkr Trust’s customizable APIs, can help deliver a smoother experience.

False rejections: Sometimes, an identity verification service may be unable to find a match in databases or to confirm an identity due to poor image quality, even when the user is legitimate. Organizations can mitigate this issue by establishing clear review and appeal procedures that allow users to resubmit documentation for manual review.

Implementation cost: Online identity verification services come with upfront costs. However, these can be offset by reducing losses from fraud, improving compliance, and streamlining operations.

AI-driven tools can improve identity verification procedures by streamlining workflows and increasing processing speed. These tools help you instantly verify customer identities at key touchpoints, ideally reducing verification slowdowns. AI can also detect some signs of fraud, such as spoofed facial images or forged documents, more accurately than manual processes.

Policies vary by organization, but many platforms offer manual review options for users who don’t have a passport, driver’s license, or state-issued ID. In some cases, alternative documents may be accepted, while in others, access may be limited until valid ID documents are provided or renewed.

Typically, there is no standard cost for implementing identity verification services. Pricing depends on the types of ID verification used, the volume of requests, and the amount of customization or integration required.

Identity verification helps organizations gain a deeper understanding of their customers and users, supporting efforts to mitigate fraud, comply with relevant laws and regulations, and build trust. For employers, identity verification and background checks often go hand-in-hand—ID verification confirms an applicant’s identity, while background checks provide the necessary information to make an informed hiring decision.

Checkr offers biometric-based identity verification for employers and individuals, as well as a range of background check packages tailored to your needs. Our APIs integrate with over 100 HRIS and ATS systems to deliver an exceptional candidate experience. Get started with Checkr today.

Checkr also helps candidates prepare for their job searches with personal background check services. You can quickly run a background check on yourself to identify any areas of concern to discuss with potential employers. Order a personal background check online today.

Checkr can also help you learn how to verify your identity. Create a Checkr Verified Profile to share with employers, which can help build trust and streamline background check and identity verification processes.

About the author

Hayley Harrison writes about a wide range of business topics and best practices, including background checks, candidate experience, and recruitment and retention. Her work includes educational articles, e-books, and blog posts.