What’s the Difference Between Identity Proofing and Identity Verification?

What's the difference between identity proofing and identity verification? 

In the realm of digital security, understanding the differences between identity proofing and identity verification is crucial as both processes are integral to safeguarding sensitive information and better preventing identity fraud. 

What is identity proofing?

Identity proofing is the process of collecting and verifying information about an individual to help ensure they are who they claim to be. This process typically involves gathering personal data, such as name, address, date of birth and government-issued identification numbers. Digital identity proofing leverages advanced technologies like document scanning, biometric checks and database cross-referencing to help authenticate provided information.

Key elements of identity proofing:

• Data collection: Gathering personal information through various channels, including online forms or mobile applications.

• Document verification: Using technologies like optical character recognition (OCR) and hologram detection to help validate the authenticity of submitted documents.

• Biometric capture: Collecting biometric data, such as fingerprints or facial images, to enhance the verification process.

• Cross-referencing: Checking provided information against authoritative databases to better confirm accuracy and authenticity.

Why is identity proofing important?

It’s a critical step in establishing trust and security in digital transactions. For businesses, especially those in financial services, the implications of failing to properly proof identities can be severe.

• Preventing identity fraud: Identity proofing helps avert various types of identity fraud, including new account fraud and synthetic identity fraud, by better ensuring information provided is legitimate and belongs to the actual individual.

• Regulatory compliance: Many industries are subject to stringent regulations that require robust identity proofing processes. For instance, know your customer (KYC) regulations mandate financial institutions verify the identities of their clients to prevent money laundering and other illicit activities.

• Enhanced security: By verifying the authenticity of an individual's identity, businesses can reduce the risk of unauthorized access to sensitive information and systems, thereby enhancing protection against data breaches and other security threats.

• Building trust: Effective identity proofing processes help build trust with customers by better ensuring their personal information is handled securely and accurately, fostering more confidence in digital interactions.

How is identity proofing different from identity verification?

While often used interchangeably, identity proofing and identity verification refer to distinct processes within the identity management spectrum.

• Identity proofing is the process of verifying an individual is who they claim to be when they first interact with an organization. It involves collecting and validating identity-related information to establish a person’s identity before they can access services or complete transactions. It focuses on the authenticity of data provided during the onboarding or account creation processes.

• Identity verification helps ensure the person presenting the information is the rightful owner of that identity. This process can involve various methods, such as device intelligence, knowledge-based authentication (KBA) questions, biometric verification and multi-factor authentication (MFA).

Key differences:

• Focus: Identity proofing centers on the authenticity of the provided data, while identity verification helps ensure the person using the data is indeed the rightful owner.

• Methods: 
  • Identity proofing involves data collection, document verification (checking government-issued IDs like passports, driver’s licenses, and ID cards), biometric capture (collecting biometric data, such as fingerprints, facial recognition or iris scans), knowledge-based authentication (asking security questions based on personal information), and database cross-referencing (comparing provided data with trusted databases like credit bureaus and public records).
  • Identity verification includes multi-factor authentication (requiring multiple forms of verification, such as passwords, one-time passcodes (OTP) or biometric data), behavioral biometrics (analyzing patterns in user behavior, such as typing speed or navigation habits), continuous authentication (constantly monitoring user activity during a session to detect anomalies), and device recognition (identifying and validating the devices used to access the service).

What are the benefits of identity proofing?

Implementing robust identity proofing processes offers several benefits for businesses, particularly in the financial sector, may expect numerous advantages, including:

• Fraud prevention: Accurately establishing an individual's identity from the outset can significantly reduce the risk of various types of fraud, including new account fraud, account takeover fraud (ATO) and synthetic identity fraud.

• Regulatory adherence: More effectively comply with regulations, such as KYC and anti-money laundering (AML) laws, thereby avoiding legal penalties and enhancing the institution's credibility.

• Operational efficiency: Automated identity proofing solutions help streamline the onboarding process, reducing manual reviews and speeding up customer acquisition — while maintaining higher security standards.

• Customer confidence: People are more likely to trust and engage with businesses that demonstrate a stronger commitment to protecting their personal information through rigorous identity proofing processes.

• Improved risk management: Better assess and manage risk, helping ensure legitimate individuals gain access to their services and systems.