The legalization of cannabis in the US and the continual development of eCommerce platforms has given online retailers of age-restricted products an unprecedented opportunity to reach new customers. But if you are selling alcohol, CBD, vapes or tobacco online, does your age verification method hold up to increasing government scrutiny? In the US, an amendment to the PACT Act (Prevent All Cigarette Trafficking) has come into force this April, putting additional restrictions on the retail of vape products. Retailers who fail to comply could face severe penalties and even prison time, according to the LA Weekly. Shipping companies including FedEx, UPS, and DHL have ceased delivering vape products altogether as of the time of publication.
The PACT Act amendment reflects the tightening supervision by legislators and prosecutors over the sale of age-restricted goods. Online retailers, however, can leverage the latest technologies to remain compliant with regulations, continue to reach customers, and grow their sales. We will out outline the legal requirements for age verification and how identity verification can help eCommerce companies not only meet regulations but grow revenues.
What the PACT Act means for vape retailers
Three years after the FDA has issued over 1,300 warning letters and fines to retailers who sold e-cigarettes and vapes to minors, an amendment to the PACT Act, called the “Preventing Online Sales of E-Cigarettes to Children Act” has come into force. Market Business News attributes the continual availability of JUUL pods to underaged users as a contributing factor the has been called the “Vape Mail Ban”. With the amendment, vaping products fall under the requirements for Electronic Nicotine Delivery Systems (“ENDS”), which means retailers are now held accountable for knowing who their customers are and keeping records of transactions.
Online retailers of other age-restricted products such as alcohol can also take note of requirements in this act to proactively implement best practices and future-proof their businesses, especially if they are operating on a global scale. In the UK, a retailer was given a £25,000 fine for selling a knife online to a 13-year-old. Age verification and Know Your Customer (KYC) solutions protect businesses from fraud, compliance breaches and the consequences.
Basic age gates no longer meet regulations
A simple “age gate” on websites, such as a pop-up asking site visitors to indicate with a click that they are above the legal age for item purchases, is not enough for fraud prevention or legal compliance anymore. Neither is asking for a birthdate in sign-up forms or taking a credit card payment as proof a user is of age. The problem with these methods is that they do not effectively verify the identity and age of the person making the purchase. A court in Germany has ruled explicitly that a retailer is still liable if their method of verifying a customer’s age can be bypassed by a minor.
Introducing age verification for stores powered by eCommerce platforms like Shopify
Online retailers can use age verification for select items in their online stores so as not to exclude a wider customer base. The online retailer SmokeCartel, a Passbase client, has a Shopify store that’s available for the general public and uses age verification as an incentive for their customers to access additional products and offers. SmokeCartel sells CBD and vape products along with other, non-age-restricted products. Instead of forcing all customers to perform an ID verification, they have a separate page inviting people to verify their accounts using Passbase. SmokeCartel embedded the identity verification process into their customer account creation, which still includes convenient social network options such as Facebook, Instagram, Google, and Amazon. Passbase’s web SDK and hosted integration allows for easy integration into store builders and eCommerce platforms such as Shopify, Magento, Wix, and Wordpress’s Woocommerce. As soon as customers complete the verification, they gain access to parts of the online store that contain age-restricted products.
Combine age verification with biometrics and ID verification
How does online age verification work? Brick-and-mortar businesses ask that a customer prove their age by providing an ID. The sales clerk can then do a quick check that the person standing in front of them matches the photo in the document. If you are doing age verification online, technology enables you to perform a similar process. Third-party providers are specialized in verifying identities and ages online, which means all retailers can incorporate them into their checkout.
Today’s leading identity verification providers use biometrics and facial matching between a selfie and an official photo ID document to verify a user’s identity, which can be combined with an age check.
- The end user starts by taking a video selfie and scanning an official photo ID document with their camera.
- The selfie video provides information for biometric verification and future authentications. Another biometric option, though not supported by all devices, is a fingerprint scan. Using a video selfie provides information for liveness detection, to avoid bots and stolen images from being used.
- The provided selfie images are matched with the photo in the ID document.
- The service verifies the document and also extracts the age automatically from the birth date.
- End users who are of age can be verified and proceed to age-restricted parts of the store or the checkout.
Benefits of using identity verification during your checkout
In the past, retailers might have been hesitant to implement identity and age verification methods because they feared a drop in their conversion rates due to the additional step for users. Today’s solutions, however, no longer trade customer experience and ease of purchase against security and compliance. Now, identity verification actually elevates the shopping experience.
- Increase conversions with a seamless customer experience: modern age verification services help screen and deter a selected group of people – minors and fraudsters – and do not add more friction for your legitimate customers. In fact, customers can complete the verification in a matter of seconds.
- Meet legal requirements for age restrictions: effectively restricts access for minors and thus protects your business from fines.
- Authentication for returning visitors: users are required to verify their age before they can purchase age-restricted products. For your loyal customers, this process can be made even easier through passwordless authentification or sign-ins: instead of providing a password to log into their accounts, users take a quick selfie. The service then verifies that the person who originally opened the account with an official ID document is actually the one logging in again.
- Establishes trust in your brand: some of Google’s most popular search terms for online retail include “which shop doesn’t ask for age?” or “how can I get around age restrictions?” Having your brand associated with loose business practices online leaves a record that is easily tracked by authorities and damaging for your brand reputation. An effective age verification process, on the other hand, establishes trust in your brand.
With the customer-friendly solutions available today, online retailers no longer have to compromise customer convenience and conversion rates for compliance with age restrictions. Your customers can now verify their identity and age in a matter of seconds to legally purchase your goods. You can also find out how identity and age verification can be applied to other industries.