How Does Online Identity Verification Work?

The request, “May I see your ID?” has become so commonplace in our daily lives, it barely registers. Whether at the check-out register or submitting a credit application, showing proof of identity in the form of a driver’s license or passport is a normal expectation when doing business.

Yet, as high-value transactions increasingly migrate online, particularly in the wake of the COVID-19 pandemic, the ability to securely and efficiently verify customer identification takes on greater urgency.

Unfortunately, ineffective manual ID verification is commonplace across both B2C and B2B organizations. This typically results in poor customer experiences, risk of fraud and failure to meet regulatory standards. At the same time, organizations need to maintain a strong customer experience. According to a Forrester study commissioned by DocuSign on digital identity verification, 78% of decision-makers see a need for identity verification tools to balance customer experience and security. For many organizations, the ability to accurately verify identity in a timely manner is essential for business to function, allowing for the creation of contractual agreements, compliance with regulations, and delivery of services to customers. 

In addition, according to a 2018 Experian report, 84% of businesses say certainty about identity would reduce their risk, which can be costly. For example, from 2008 to 2019, financial institutions paid out $63 billion in penalties for non-compliance with Anti-Money Laundering (AML), Know Your Customer (KYC) and sanctions regulations – laws that often have requirements for robust identity verification at their very core.

As organizations in a wide range of industries seek to balance providing a smooth and convenient customer experience with meeting stringent compliance requirements, there’s a strong need for a more thorough and seamless identity verification process.

DocuSign ID Verification is the premier method of digitally verifying government issued IDs and electronic IDs, allowing you to reduce cost and risk by automating identification anytime and virtually anywhere. This solution connects seamlessly with existing DocuSign infrastructure such as the eSignature platform, including APIs, for a mobile-optimized signing experience.  

What is online ID verification?

Identity verification for signing parties is a critical part of agreements, but establishing identity can be complicated, especially when agreements are high-value or vulnerable to fraud, and are entered into remotely. 

For many common transactions, a link to a validated email address is sufficient for establishing the identity of the signer. But many organizations want enhanced signer identification beyond the email method for their most high-value agreements.  DocuSign offers a variety of enhanced solutions to identify new signers and authenticate returning users, including methods that employ SMS messaging, phone call and knowledge based authentication (KBA).

In certain highly regulated industries and other use cases, proof of identity in the form of a government-issued ID or electronic ID is the most secure option. Of course, when the agreement is not consummated in person, the signer is not physically present to provide a form of ID. In these cases, DocuSign ID Verification allows the signer to submit their driver license, passport, or electronic ID to prove who they are, from wherever they are, using their preferred device— saving time and helping improve process efficiency.

DocuSign ID Verification works hard behind the scenes, ensuring that only valid identity documents are accepted. This method of verification is accomplished by analyzing the unique data sets within an identity document. The name and information on the agreement is then cross-checked with the one on the ID document. This helps ensure that only the correct individual can view and sign the agreement. 

How DocuSign ID Verification works

When you add DocuSign ID Verification to a document to be signed electronically, the recipient will be required to complete the ID verification steps to view and sign the document.

The following steps illustrate how to obtain the necessary information.

Step 1: The recipient takes a photo of their ID and uploads it

The recipient receives an email notifying that they have a document to sign. Before being granted access to the document, the recipient is prompted to verify identity by uploading a copy or taking a photo of their government-issued ID.

DocuSign ID Verification supports a wide range of identification formats, including the most accepted government-issued photo IDs, such as state-issued driver licenses and U.S. passports.

In addition, DocuSign ID Verification currently supports European and Australian electronic IDs (eIDs) and will offer expanded support of U.S. electronic identification protocols beginning in late 2021.

Step 2: ID Verification analyzes features of the ID

DocuSign ID Verification will next analyze the ID features, such as security markings and watermarks, to ensure validity. It’ll also confirm that the name on the ID matches the name on the agreement, reducing the risk of fraud.

When looking at the form of identification, ID Verification verifies that:

  • The ID is not expired. 
  • The name exactly matches the name on the envelope as specified by the sender. 
  • The Machine Readable Zone (MRZ) is consistent with the rest of the ID. The MRZ is the string of letters and numbers on the bottom of the passport and usually appears as a barcode.
  • Visual features and holograms are consistent with those for that ID type.
  • There is no evidence of tampering such as manipulated fonts, abnormal letter spacing, or physical damage to the ID.

DocuSign has recently released several new enhancements to ID Verification, providing organizations with additional flexibility and customization. These include:

  • ID Evidence records verification status and supports compliance requirements.
  • Users can extract information such as verification status, name, address, or a copy of the ID document.
  • With manual review, staff can review and validate a photo of the ID when it’s not automatically recognized.

Step 3: Combine strong identity verification with electronic signatures

Companies can save time by combining electronic signatures with identity verification. With DocuSign, users who send documents for signing can require ID verification by clicking the “ID verification” button included on their agreement and continuing with the normal steps for sending the document. When providing identity verification, it’s best to provide an end-to-end solution to avoid confusion. By linking signer identity verification and electronic signature, you provide a seamless, professional experience for your customers.

Step 4: ID Verification included in Certificate of Completion 

Once the government-issued IDs are verified with DocuSign ID Verification, the signer will be able to access and sign the document. The time, date, and verification process will be noted in every Certificate of Completion, helping to support internal audit and compliance requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML). Furthermore, you can choose to extract information on the ID document, such as name, expiration date, or a copy of the ID. Using APIs, this information can be extracted to your system of choice in accordance with your policies and business needs.

ID Verification supports a variety of use cases

By using digital identity verification, combined with a robust set of controls, organizations provide a smoother and more consistent experience for employees, customers and staff. This technology helps make it possible to support a number of potential use cases, including the onboarding of new employees working remotely. HR professionals can quickly and easily capture the new employee’s electronic signatures on I-9 forms and W-4 tax forms, and validate their government issued IDs digitally.

ID Verification also helps minimize risk in financial services for common transactions like new account opening, wire transfer agreements and loan or mortgage application processing, by providing higher signer assurance and helping facilitate compliance with banking regulations such as Know Your Customer (KYC) and Anti-Money Laundering (AML). 

Other occasions where more thorough identity verification may be advantageous include:

  • A telecommunications provider signing up a new customer to an ongoing service agreement, such as a mobile phone contract.
  • A landlord finalizing a lease agreement.
  • An insurer issuing a new insurance policy or processing a new claim.
  • A fertility clinic provider obtaining medical consent from a patient and the spouse.

Having the ability to identify your customers and employees properly and thoroughly can help protect your business from fraud. In fact, in some regions, a digital agreement is not legally enforceable without being tied to a secure identity verification process. Reliable verification processes also puts customers at ease and creates more opportunities to grow your business. Digitizing the identification process reduces risk, increases trust, and supports legal validity and compliance.

Learn more about DocuSign ID Verification, the digital way to verify government IDs and electronic IDs as part of a connected agreement process.