Here’s How Document Verification Can Help Your Firm Avoid Fraud

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A major challenge for online businesses today is to verify the legitimate identity of their customers. Thanks to ever-evolving technology, numerous advancements have been made in the field of artificial intelligence that businesses can make use of to make business operations more convenient. One such innovation is that of AI-powered identity verification solutions that enable the accurate validation of user identities.

According to the FTC, 4.8 million identity theft incidents were reported in 2020 and the total number of fraud complaints rose by 113% compared to 2019. From this, 29% of total complaints were made regarding identity theft, up from a value of 20 million in 2019. 

These figures indicate the importance of identity verification solutions which have the ability to substantially reduce the numbers of financial crimes.   

As a result, document verification solutions are gaining ground in different industry sectors, be it from e-commerce stores to financial institutions. In this method of verification, customer authentication is ensured with the help of valid identity documents issued by the government. 

Increasing Demand for Document Verification

From submitting passports or government-issued ID cards before booking a flight online to receiving a driver’s license, it is no doubt that most of us have experienced the significance of document verification. Document authentication and ID verification ensure that an individual is actually who they claim to be. Valid ID documents include, but are not limited to:


  1. Government-issued ID cards
  2. Utility bills
  3. Bank statements
  4. Passport 
  5. Driver’s license
  6. Rent agreement 
  7. Tax returns


With the help of these documents, the likelihood of false identities and risks associated with them can be minimized.  


The significance of document verification is well known to financial institutions such as banks, insurance, and brokerage companies, investment firms, fintech, etc., which is why its implementation has to be carried out keeping in mind customer convenience, operational efficiency, and data security. 


Listed below are a few document fraud types that fraudsters use to disguise their identities for illegal financial gains. 


  • Stolen documents: Documents that belong to someone else
  • Fake documents: Completely false and invalid documents
  • Modified documents: Missing elements, such as the absence of a hologram, digital signature, or rainbow print

Implementing Document Verification

The traditional method of document verification involved the customer physically visiting a branch to enable face-to-face verification. However, this method became insufficient due to increasing financial fraud and was highly error-prone.


On the other hand, online identity document verification has proven to be quite convenient, quick, and safe to carry out. 

Authentication of a document can be completed within a matter of seconds through automated solutions. The three main steps in this process are listed below: 

  • Capture: The customer is asked to take or upload an image of the ID document 
  • Extract: Details such as their full name, date of birth, gender, etc. are automatically extracted from the official ID document with the help of optical character recognition (OCR) technology
  • Screen: The details on the document along with its type and format are verified in mere seconds, displayed on the customer’s screen, and uploaded to the company’s back-office


Benefits Of AI-powered Document Verification Solutions


Numerous elements of an ID document can be checked and verified using AI-powered document verification solutions. Listed below are some benefits that firms can use to their advantage by employing artificial intelligence during the document verification process:


  • Enhanced customer experience as the document check process is completed within seconds
  • Reduction in the risks associated with suspicious customers and their transactions
  • Prevention of frauds such as identity theft and false chargebacks 
  • ID documents are automatically converted into a machine-readable format to accurately identity modified, fake or edited fields in an ID document

Customer Attributes that can be Verified

Compiled below is the list of attributes that are authenticated through automated document verification solutions: 


  • ID document details: Full name, date of birth, health insurance number, birth certificate number, etc
  • Nationality and immigration status: the customer’s permanent residence, place of birth, citizenship number, etc.
  • Personal information: Blood group, birthmarks, hair color, religion, etc.
  • Business and employment registration: Employee ID number,  joining date, salary slips, invoice details, etc. 

Summing it Up

Verifying identity document details such as the customer’s full name, their date, and place of birth, document issue, and expiry date, and other personal information has a significant role in mitigating financial frauds. With the help of document verification, companies can ensure customer data privacy by weeding out fraudsters in the initial stage of customer onboarding. By abandoning manual methods of verification and using AI-powered software, a balance between customer satisfaction and fraud prevention can be efficiently maintained.

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