As we evolve to a virtual format, we are threatened by new forms of fraud. Providing confirmation that a consumer, customer, or organization is who they say they are usually requires that they provide identity verification and authentication. These terms are not used interchangeably and not knowing the difference can make you vulnerable to fraud.

A verified identity proves that this identity exists, whereas an authentication proves that this user is who they claim to be. However, it is important to note that verifying an identity exists does not prove that it belongs to the person putting in the information.

When creating and securing an account online a combination of a name, address, phone number and email on a form can provide enough information for a company to verify a consumer’s identity to establish trust upon creation of an account. The information can be cross-checked among multiple data sources such as utilities or phone carriers, to ensure the name matches the data on file.

Fraudsters can illicitly obtain identifying information to apply for new accounts in their victims’ names. Some create synthetic identities and fabricate credentials that are not associated with a real person which can fool the verification process.

Some organizations recognized this type of identity theft and have shifted toward a better authentication process that require more than just simply verifying that an identity exists. Organization’s work to confirm that the person who created the new account provide some proof of identity by asking to provide a government photo ID for facial recognition.

Authentication is still an on-going identity-proofing process that checks both the identity of the digital user and ensures the integrity of the device they are using. The most notable system in place currently is the two-factor authentication and one-time passcode method that grant account access to the right person in real time.

A study from CMO Council in 2021 showed that authentication frustration caused 61% of consumers to abandon a transaction. Another report from TransUnions 2022 Global Digital Fraud Trends showed that approximately two-thirds of consumers would switch companies for a better digital experience.

Hundreds of millions of identities are exposed to identity theft each year. In a recent study, it was found that: "10.2% of children had someone else using their Social Security number. This is 51 times higher than the 0.2% rate for adults". A child's Social Security number was used more often than an adults for a variety of reasons. A child's Social Security number is very enticing to thieves because it is unused and can be paired with any name and birth date. In addition, a child's identity can be used for years before being detected.

To know if your child has been a victim of identity theft, check to see if your child has a credit report. It is important to check all three of the credit reporting agencies as the reports are not identical.

Fraud: Verification vs. Authentication

Is your child's identity safe?