July 28 2006

Online retail drives 84 million identity checks a year...

... according to new research from Manchester Business School. The current level stands at some 500 million and the average adult has their identity checked some 11 times a year.

Every adult in the UK is asked to prove their identity an average of 11 times a year according to new research carried out by Manchester Business School on behalf of leading fraud prevention specialists GB Group.

And the continued growth in online retailing for smaller goods will account for over 84 million checks despite the fact that sales of age restricted goods such as drink and tobacco are falling, according to the research.

Just over half a billion ID checks are carried out annually by businesses in the UK. Many of these involve the circulation of valuable documents such as passports, utility bills or driving licences, costing billions of pounds, frustrating customers and, ultimately, exposing the consumer to even greater risk of ID theft.

And the annual number of checks is set to climb to over 761m by 2010 - a rise of 42 per cent - as regulation designed to combat identity fraud, money laundering and terrorism tightens up. This will equate to nearly 17 checks per person.

GB Group, which carried out its research with Manchester Business School, stressed that UK businesses are wasting billions of pounds by persisting with manual checks that can take weeks, in the worst case, to process.

Another issue is simply the additional burden each check places on individual customers. For example, someone moving house may have their identity checked more than five times throughout the process by different organisations such as estate agents, solicitors, financial advisors, lenders, and the Land Registry.

Rob Laurence, managing director of GB Group's DataAuthentication team said: "Each UK citizen has to prove their identity almost once a month and certain life events such as marriage or moving house will require multiple checks to take place all at the same time. The current burden on the consumer is unnecessary and as regulation becomes tighter across all sectors, we will see more and more identity checks becoming a fact of life. It's not that long ago that you didn't need to show your passport just to travel on a domestic flight. Who knows, will we one day need ID before booking a train journey?

"Modern lifestyles and improvements in technology mean that businesses can now offer consumers the ability to verify their identity online - a process proven to be more reliable and cost-effective and much less cumbersome to the end customer.

"Even just a few years ago it was still feasible to ask a customer to pop in to a branch or local office with their documents for a visual identity check - now, customers find this frustrating.

"Consumers are used to shopping, banking and even gambling online. A business that makes them undergo a lengthy checking process while it verifies their identity risks losing them to one that can do it in seconds.

"While consumers generally understand the need to prove their identity and accept that it is partly to protect them, most are frustrated to be asked to produce documents such as passports and driving licences, often a number of times by different departments of the same business."

GB Group believes the solution lies, partly, in automating and accelerating the whole ID checking process.

For retailers the challenge will be to make the process coherent, minimising the inconvenience to customers while reminding them of the benefits of this security. Customer might initially complain but we should remember that it's only this year that "security fears" have fallen from the main cited impediment to online commerce. Carelessness in this area will certainly adversely affect sales well into the medium term.

Source: Citypress news release at GB Group PLC. Ian Jindal