A strong identity

The Nov. 1, 2008, FACTA Red Flag Rules deadline is right around the corner, and Veratad Technologies LLC is primed to help businesses gain compliance, thereby reducing the risk of identity theft.

According to Pattie Dillon, President of Veratad, identity theft is rampant. She said the New Red Flag Rules Regulations and Guidelines, which amend the Fair and Accurate Credit Transactions Act of 2003 (FACTA), are the government's way to prevent identity theft.

"Red Flag Rules apply to financial institutions and creditors such as banks, credit unions, auto dealers, mortgage brokers, utility companies and telecommunications companies," Dillon said. "Our solutions are ideal for meeting the identity verification and address discrepancy requirements of Section 114 and 315 of the FACT Act."."

Dillon went on to say that Veratad's applications provide merchants with an easily deployable solution that authenticates user identities at many levels, so merchants can better manage risk.

In addition, Veratad offers a Red Flag Rules document generation and employee training module, as well as identity restoration services, which create a complete Red Flag Rules compliance solution. Financial institutions, card issuers, merchants and others who are subject to the regulations have until the Nov. 1, 2008, deadline to implement a Red Flag Rules identity theft prevention program. Veratad's flagship products, Age Match, IDMatch and IDMatch+Plus, include features that balance protecting businesses against unauthorized access while safeguarding consumer privacy.

"We verify age and identity with as little information as a name and address, while providing the user an opportunity to use as much input information as is necessary to mitigate their risk for their particular business model," Dillon said.

Veratad's mission is to provide customers with solutions that meet their needs while respecting and protecting personal cardholder privacy.

Walk the line

Veratad recognizes the balance that must be struck between verifying identity and protecting consumer privacy. Even when those two elements are in harmony, consumer perceptions must also be considered and handled appropriately. If consumers are comfortable entering e-mail addresses but not dates of birth, it is up to Veratad and its merchant clients to put consumers at ease so they feel secure enough to complete transactions.

When merchants sell high-dollar items, they desire a greater level of security. However, Dillon stated her company realized customers begin to feel uncomfortable after two verification questions. Veratad specializes in creating solutions so all parties feel protected. For example, when asked for full Social Security numbers, most consumers will, at the very least, hesitate before continuing with the transaction. Many will abandon the sale. Even entering the last four digits of Social Security numbers can make some shoppers uncomfortable enough to end transactions. To put online shoppers at ease, Veratad created IDR Calc. Instead of asking for Social Security numbers, the sum of the digits in Social Security numbers is requested from consumers. Veratad then combines those numbers with consumer names and address information to verify identities without exposing sensitive personal information to the requester or the requester's employees.

Protecting the young

Issues of privacy and identity verification usually involve identity theft and Payment Card Industry (PCI) Data Security Standard (DSS) compliance. However, another aspect of ID verification is just as important – age verification. In the world of social networking Web sites and Internet chat rooms, Veratad considers it vital that children's identities are protected. "Veratad's proprietary data for younger age groups, not available from competitive age and ID verification companies, gives us an obvious advantage," Dillon said. Veratad's data coverage of age groups 14 through 18 supplements billions of data records for legal adults.

A choice of protection

Veratad's customers can choose from three platforms:

1. A virtual terminal for individual transactions

2. An application program interface (API) Web service, which integrates with existing Web Sites

3. A batch process

"All Veratad's secure platforms are designed to maximize successful verification of an individual's identity and/or age while maintaining a low level of transaction abandonment and a high level of consumer privacy," Dillon said.

On the fly

As ISOs and merchant level salespeople (MLSs) know, mobile payment is becoming more and more popular, as it is a quick and flexible payment alternative. However, transactions that require keying in large quantities of identity verification information into consumers' handheld mobile devices can be slow and frustrating.

So Veratad designed a solution specifically for this milieu. “We built a reduced entry option that still gives us the confidence that the identity was verified, without having the person feel like they are all thumbs," Dillon said.

Information such as first name, last name, home address or AIP code can be used to identify users, without the need to enter a lot of text.

Inclusive, not exclusive

Just as merchants need to protect customer privacy while operating within FACTA and complying with the PCI DSS and other regulations, they must also maintain accurate records as well. Veratad helps merchants and processors do just that.

For example, Veratad can isolate individual transactions without divulging customer names, addresses or other sensitive information.

Dillon said this reporting system provides a "footprint of the transaction," which is stored for audit purposes for up to seven years. The sensitive data from that transaction is eliminated from the stored information.

"This approach eliminates the possibility of a data breach by internal or external intruders, or the sale of data to marketing companies or competitors," Dillon said.

ISOs, MLSs welcome

Veratad's services are employed by online retailers. But Veratad caters to a variety of other industries as well. Financial institutions, call centers, auto dealers, check cashers, age-restricted content providers, wireless providers and utility companies also benefit from Veratad's FACTA compliance and age and identity verification services.

Veratad helps these and other companies create a FACTA compliant identity theft prevention program document, with customized online employee training modules, identity verification and recovery services.

ISOs and MLSs can represent Veratad's solutions to any of these industries through the company's gateway and reseller programs. Resellers are eligible for initial and residual commission compensation while processors may opt for its buy rate program. Buy rates are based on protected tiered volumes.

Branching out

According to Dillon, Veratad, of course, helps ISOs and MLSs increase revenue with low-risk merchants. Veratad's name and address verification services can be used by all businesses to reduce and prevent chargebacks. But ISOs and MLSs who wish to pursue higher-risk merchants, now may be the time, with Veratad at their side.

Adult content providers and travel agencies are examples of high-risk merchants – businesses with a greater potential of canceled orders and chargebacks. Though the level of risk in processing transactions for these businesses may be elevated – with increased levels of identity fraud being part of that heightened threat – the potential residual income is equally high.

Veratad believes its solutions are a way to mitigate potential risks with "problem merchants," so ISOs and MLSs feel comfortable taking them on. "Those that are concerned about going to high risk or medium-high risk can feel more confident and increase merchant acquisitions," Dillon said.

ISOs and MLSs can review their client lists and identify any industries or specific merchants struggling with fraud. Perhaps those struggling merchants wish to diversify their products or the markets they service but haven't done so because of chargeback risks. With a solution that verifies identify and/or age, such risks can be lessened to a point where merchants feel confident in taking on that new business.

Identifiable integrity

Teaneck, N.J.-based Veratad dates back to 2002, when its current IDresponse Platform was developed. Veratad has been recognized by many institutions and organizations as being a vital service to protect businesses from identity fraud, including the federal government and state agencies like the State of Michigan Liquor Control Commission and the Motion Picture Association of America.

"We provide unique data," Dillon said. "We are very customer service oriented in helping our customers service their clients. We can sculpt the type of data that will benefit them the most." Verifying identity and age is about keeping people honest. For Veratad, honesty is paramount to their business on all levels. Dillon summed it up when she said, "Honesty, integrity and unequivocal excellence in product development and service will be the guiding principles upon which we build our future."

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