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 thousands of different types of identity documents with ParseLink data automation software. When ParseLink is embedded within a financial institution’s core system, a teller can initiate a scan of an ID, like a driver’s license, to the installed check scanner. The image is captured and then passed to ParseLink, which quickly performs hundreds of checks, increasing the likelihood of catching forged or manipulated documents versus manual inspection. This means financial institutions now have automated ID verification available with no additional hardware costs.
How ParseLink software catches fake IDs
When ParseLink is offered by a core banking platform, an identity document can be inserted into a SmartSource scanner. The scanner automatically brings the document into the unit to take a high quality, white light image. The core provider then passes the image to the integrated ParseLink software, which gets to work performing hundreds of AI-powered ID authentication checks.
First, these tests 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 where it has been integrated such as Fiserv and Jack Henry. This saves tellers time spent typing, by sending 100% accurate, typo-free data into the system directly from the scanned ID without the need to have multiple pieces of equipment on their desk.
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 significant obstacles, two of which were:
- 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 increasing the chances of catching more fraud attempts quickly using highly sophisticated technology 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. A financial institution can now catch a high percentage of fake IDs without any calls to outside databases. This means reliable, predictable monthly or annual subscription pricing, and the ability to embed ID scanning into many financial institution’s document management workflows – no cost per scan, no worries about re-scanning questionable customers, and no need to implement logic or decision trees to decide when to scan.
Customer data never leaves the financial institution’s core system where ParseLink is embedded and a customer’s personal information is never sent to any external systems. This ensures financial institutions can easily maintain 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 document verification
With each scanned identity document, a financial institution can add additional layers of verification by sending the extracted personal information to third-party sources, such as the American Association of Motor Vehicle Administrators (AAMVA), to ensure the data on the document represents an authentic person and not a synthetic identity.
IDScan.net also offers the ability to perform an IdentiFraud check, a comprehensive multisource query of the Social Security Administration, credit bureaus, telecom records, public utility records, address verification, OFAC and other watchlists, and lists of known fraudsters and stolen identities. This confirms the data on the identity document matches verified information from trusted, authoritative sources.
These queries 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 carrying it.
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 light sources, allowing an even greater level of analysis of each document. With the addition of ultraviolet and infrared light, ParseLink is able to perform additional tests such as reviewing the UV security marks, infrared marks, and holograms on the document which are invisible to the naked eye. Research shows these additional tests detect up to 95% of fraudulent identity documents.
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 robust verification tools 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.
