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 system 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 this publication.
The PACT Act amendment reflects the tightening supervision by legislators and prosecutors over the sale of age-restricted goods. The good news is that online retailers can now upgrade from basic website age verification to bank-grade solutions to meet regulations and continue growing sales. We will out outline the legal requirements for age verification systems and how eCommerce companies can quickly add identity verification solutions today to confirm customers’ ages and impress them with great user experience.
How the PACT Act affects online age verification
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 popular vape brands 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.
Retailers for age-restricted products still have ways to reach customers. Note the new regulatory requirements and plan your strategy for meeting them while delivering great shopping experiences, especially if you are thinking about cross-border sales. In the UK, a retailer was given a £25,000 fine for selling a knife online to a 13-year-old. Age verification systems and Know Your Customer (KYC) solutions protect businesses from fraud, compliance breaches and the consequences.
The key question to ask now is: how can I increase assurance that a customer is age verified?
Basic age verification systems no longer meet regulations
Basic online age verification systems (sometimes known as “age checkers”) such as a pop-up asking site visitors to indicate with a click that they are above the legal age for item purchases, are 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.
The good news is that online age verification solutions have also become more user-friendly, for both customers and for businesses setting them up. The latest age verification system like Passbase’s are built into identity verification processes, without any added steps and have built-in fraud detection features such as liveness detection and document checks.
Introducing age verification for stores powered by eCommerce platforms like Shopify
One of the common misconceptions about having online age verification is that it must be applied store-wide. Effective retailers instead confirm the ages of customers 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 online 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. These steps are familiar to customers, so it does not add friction. As soon as customers complete the verification, they gain access to parts of the online store that contain age-restricted products.
Since many online retailers use ecommerce platforms, one of the common concerns is whether a platform like Magento or Shopify has an age verification system, app or plug-in. The simple answer is that many bank-grade identity verification solutions offer either direct integrations, such as Passbase’s web SDK or hosted integrations where you can offer customers a “Verify Me” button. The hosted button integration can be inserted into any website or e-commerce store powered by Shopify, Magento, Wix, and Wordpress’s Woocommerce. If you change platforms, you can continue to use the same hosted integration and not worry about finding new website age verification plug-ins.
Get built-in fraud prevention for your online age verification system
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. For online age verification, digital technology enables you to perform a similar process. Third-party providers are specialized in online age and ID verification, 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 age verification.
- 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 system and 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 online age 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 undergo online age verification 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 system, 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.
Passbase provides a convenient way to integrate an age verification system into their platforms via the Passbase API or with SDKs for iOS, Android, and web. Sign up with Passbase today or book a demo.