with Jillian Kossman and Debi Scott
IDScan.net
As criminals become bolder, new tools can help you fight back at the bank branch
News articles are published weekly detailing major scams and attempted theft perpetrated at banks, credit unions, and small FIs by criminals using a fake ID. In Pennsylvania, a woman used a fake New York ID to try and withdraw $15,000 from an account that did not belong to her. A Florida woman stole cash advances by using a fake ID at multiple credit union branches. And in New Jersey, an Army veteran racked up $266,000 in fraudulent loans, obtained by using a variety of fake IDs.
Theft against financial institutions continues to be lucrative for fraudsters, and in many cases, their ability to scam banks starts with their ability to conceal their identity using a forged identity document. These documents can be synthetic identity documents – created using a blend of real information and cleverly Photoshopped elements – or fake IDs that can be ordered for as little as $40 online, shipped to the US in just a few days. Identifying these documents quickly and effectively is a critical step for organizations looking to prevent fraud.
The check scanner at your teller window now doubles as an ID scanner
Now, banks and credit unions can leverage existing hardware in their teller lanes to verify IDs. The SmartSource Elite line of Digital Check devices is now fully compatible with ParseLink data automation software, which offers the ability to perform hundreds of checks on each ID, catching the majority of fakes. Financial institutions can now perform best-in-class ID verification with no additional hardware or increased real estate on the countertop.
How ParseLink software catches fake IDs
After inserting the ID into the SmartSource scanner, the ParseLink software gets to work performing hundreds of AI-powered ID authentication checks. First, these checks analyze the data in the ID’s barcode, looking for anomalies. IDScan.net’s software looks for known “tells” that an ID may be fraudulent, by ensuring the data matches the known template for each jurisdiction. This may be something as simple as: for Florida IDs, every driver’s license number begins with 01, so when a Florida ID presents a driver’s license number that begins with 03, our software can immediately flag it as fraudulent. ParseLink performs between 70 and 100 tests on every single barcode, including embedded security features.
Next, the software performs multiple tests on the scanned images under white light – looking to ensure the ID’s design matches known templates for the jurisdiction. The scanner’s 600 DPI image sensor allows analysis at the pixel level, so fonts, images, windowpanes, data placement, and evidence of tampering can be reviewed.
Lastly, the software performs front/back crossmatch, which uses optical character recognition (OCR) to read the text on the front of the ID. This data is then matched to the data stored in the barcode. Crossmatch is a critical element of ID verification, as many fraudsters will add their legitimate information to the front of a stolen ID, but may not be sophisticated enough to generate a real barcode. These IDs can be identified when we review the data from both the front and back of the ID to flag any mismatches.
Data mapping into core systems
ParseLink software users also benefit from instant data mapping from the scan of each ID. All fields stored on the ID can be mapped into systems such as Synergy, Meridian Link, Fiserv, Jack Henry, and others. This saves tellers time spent typing, by sending 100% accurate, typo-free data into the system directly from the scanned ID
It’s also possible to configure the software to save and attach an image of the ID to the user’s profile. This eliminates the need for paper copies and time spent at the copy machine. Capturing images of the ID, especially the photo of the customer, is another critical tool for ID fraud prevention, as it allows your bank employees to check against this image at a later date. That eliminates the ability for fraudsters to use the identity of one of your legitimate customers – for example, by creating a fake ID with their own picture but the customer’s personal information.
ID fraud prevention at scale, and on-premises – no per-scan costs or outside queries
Early attempts to implement ID scan technology in the bank branch faced two significant obstacles that were usually deal-breakers:
- Making queries to an outside database often lengthened the transaction process by an amount of time that was unacceptable to the customer; and
- Paying an additional fee to query a database on every teller transaction turned out to be cost-prohibitive for the bank.
Solving both of those problems meant finding a way to catch the majority of fraud attempts without using outside help, and with a fixed cost instead of an uncapped per-item cost. Perhaps ironically for this day and age, the best solution was to “un-cloud” the software – in other words, to bring as much of the database and as many key tests as possible into a standalone program that runs locally.
ParseLink is installed software that runs on-premises. Your financial institution can catch the majority of fake IDs without any calls to outside databases. This means reliable, predictable monthly or annual pricing, and the ability to embed ID scanning into all your workflows – no cost per scan, no worries about re-scanning questionable customers, and no need to implement logic or decision trees to decide when you scan.
Customer data never leaves your system and is never sent to any systems outside of your firewall, ensuring that you can easily continue the highest levels of data privacy and compliance.
Enhanced ID fraud prevention - two ways
For financial institutions who are looking to go above and beyond to protect themselves against synthetic identity fraud, there are multiple options to enhance the basic protection your scanner can provide.
Adding third-party tests to your ID verification
With each scanned ID, your employees can add data checks from third-party sources. These provide two types of additional assurance. DMV database checks confirm that the information on the ID matches the jurisdictional records, which prevents synthetic identity fraud.
IDScan.net also offers the ability to perform an IdentiFraud check, which is a comprehensive multisource check that queries the Social Security Administration, credit bureau, telecom records, public utility records, address verification, OFAC and other watchlists, and lists of known fraudsters and stolen identities. It confirms that the data on the ID matches known information from trusted sources.
These queries can be purchased in buckets of 100 and used on demand. They are particularly useful for adding extra protection to high-risk or high-value transactions, as they provide additional assurance of the legitimacy of the ID and the individual.
High-tech security features like the infrared logo on the back of an ID card (left) or the ultraviolet printing on the front of a driver’s license (right) can be picked up with a specialized dedicated ID scanner.
Dedicated ID scanners
A second option for increasing a financial institution’s ability to protect against ID fraud is the use of a dedicated ID authentication device. These devices are equipped with additional cameras, allowing an even greater level of analysis of each ID. Because they allow for review of the ID under ultraviolet and infrared light, ParseLink can review the UV marks, infrared marks, and holograms on the ID, which allows for detection of up to 95% of fake IDs at a predictable monthly cost.
ID scanning doesn’t just catch fraud – it makes people less likely to attempt it in the first place
In a study of more than 20 auto dealers classified as “high-risk” businesses, IDScan.net found dealerships that implemented ID verification before test drives experienced a 50% drop in presentment of fake IDs between month one and month six. This echoes research in the nightlife and hospitality industry which indicates that the mere presence of an ID scanner reduces crime by 57%.
Simply put, bad actors do not want to have their ID scanned. Adding ID verification will not only catch fake IDs presented to fraudsters, but it will also reduce the likelihood that your organization is selected as a target for fraud, as fraudsters will choose financial institutions without verification procedures in place.
Get started today
ID fraud is a multi-billion-dollar problem, and banks, credit unions, and other financial institutions are a top target. It is imperative that businesses use the tools at their disposal to stop fraudsters using fake IDs. Not only is this critical for the business’s bottom line, but it is also a top concern for consumers. In a 2024 survey of 1,000 US consumers, nearly 56% said they were “very concerned” about how financial institutions protect their identity. ID verification ensures that fraudsters can’t use fake IDs to impersonate and steal from your honest, valued customers.
If you’re interested in implementing ID verification with a Digital Check device, the best way is to contact the software provider for your core banking system. For questions about Digital Check hardware and how it fits with your ID scanning plans, contact us at sales@digitalcheck.com or call 847-446-2285.
