From the legalization of cannabis sales in the US to our continued dependency on delivery services during Covid-19 restrictions, online service providers, retailers, and gaming operators have an unprecedented opportunity to reach homebound consumers. Governments are also tightening regulations for online transactions and increasing fines for businesses that fail to perform sufficient KYC and age checks. By April 2021, the total fines for the gambling industry had already crossed £24 million. Businesses with age-restricted goods and services that adopt robust age verification solutions will simultaneously stay compliant and build trust with users to grow sales.
As an identity verification software provider, Passbase is powering gaming platforms, adult content providers, and eCommerce businesses that have incorporated age verification into their user onboarding. In this post, we will outline how businesses from various industries can choose more robust ways of incorporating age verification to reduce fraud and improve customer experiences.
Age verification incentives for eCommerce
Although performing age verification for online retailers has been a challenge in the past, regulators are clamping down on failure to do so. In 2018, the FDA issued over 1,300 warning letters and fines to retailers who illegally sold e-cigarettes and vaping products to minors, the largest coordinated enforcement effort in the agency’s history at the time. In April this year, the Vape Mail Ban (S 1253) has been signed into law as part of the PACT Act, and only USPS is still fulfilling vape orders with an adult signature required.
Many online stores only requiring online customers to enter a birthdate as their age check before proceeding to payment are exposing themselves to the risk of investigations and fines. However, eCommerce businesses can now insert sophisticated age verification methods through official photo ID scans and face matching with a customer’s selfie to ensure customers are legal adults. These identity verifications can be embedded into online stores built with popular eCommerce platforms such as Shopify. Smoke Cartel, a Passbase client, incentivizes customers to perform identity verification with access to CBD dried flower products, pre-rolls and exclusive offers. You can find out more in our post about age verification and online retail.
Age-restricted alcohol purchases for food delivery
Although food delivery platforms are not age-restricted, the items that their restaurant partners sell might be. In May 2015, the state of California began investigating food delivery app, Uber Eats, for enabling the sale of alcohol to minors. As alcohol remains an age-restricted product around the world, global and local food delivery platforms may be facing scrutiny as online ordering continues through Covid-19 restrictions.
Alcohol sales are an important revenue stream for food and beverage businesses, so it is a necessary feature for successful food delivery apps. To build trust with customers and steer clear of future fines, food delivery apps can restrict alcohol purchase options to users with performed identity and age verification. Apps can accelerate the end user registration by performing identity verification as a selfie that is facially matched against official ID documents, where key information such as name and date of birth can be extracted to create the user account to save the end user time and increase your assurance of an end user’s identity and age. For the best user experience, delivery apps adopting age verification today should select a cross-platform identity verification service provider that supports iOS, Android, and web solutions.
KYC checks for online gambling and sports betting
Online gaming has an interest in identity verification and age verification to address two major considerations: regulatory compliance and fraud reduction. Proving a robust age verification solution can open up market opportunities such as Germany, which legalized online gaming from the latest GlüNeuRStV in 2020.
Online gambling and sports betting operators have Anti-Money Laundering (AML) compliance requirements that compel them to perform Know Your Customer (KYC) checks. Platforms that perform KYC checks using official photo ID documents can add an age check as a requirement, without additional steps for the end user. In March 2020, Hillside Sports had been fined fined SEK1 Million for offering odds on a friendly match that featured underage players.
In the past, gathering and storing sensitive user data to perform KYC checks was too costly for operators to justify. Now operators can choose from a range of service providers that offer a quick selfie and ID verification to verify a user identity in seconds, while factoring in the necessary age check, to facilitate responsible gaming. Furthermore, end users who have used Passbase to verify their identity once can take a selfie to perform passwordless sign-ins and authentications to make purchases.
Fair play for eSports
Reducing player fraud has become a central issue for eSports. Players competing from home are presenting challenges for end user and age verification for competitive leagues. Some leagues that want to prevent cheating through multiple or ghost accounts are currently monitoring users, which can feel invasive. In contrast, users can perform a seamless identity verification in a few steps to participate in age-restricted tournaments. Using video selfies combines facial matching and liveness detection, which helps help users prove their identity and that they are in front of their devices to reduce player fraud and ensuring fair play for tournament platforms such as Z League, a Passbase client.
In addition, game distribution platforms such as Steam will need to prove sufficient age verification to continue to retail games with adult-only content. By the end of 2020, Steam blocked all adult-only games in Germany. One potential reason may be that Steam only requires a user to enter their date of birth with no ID check, which is insufficient age verification for German’s pornography laws. With the available localization of services today, game distributors can easily integrate identity and age verification solutions into their platforms to remain competitive in markets with youth protection policies and requirements.
Security for adult content creators
With the ongoing Covid-19 pandemic, many professionals in the adult entertainment industry have shifted to online content creation, driving the need to secure content for creators and regulation compliance for platform operators.
On the regulatory side, operators for adult content have to contend with new regulations, such as the UK’s Digital Economy Act requiring pornography platforms stop UK users from accessing content until they can prove they are over 18. In 2020, France introduced an age verification system to protect children.
Premium upload platforms for adult content have also seen a surge in content creators, but the market remains competitive. In order to attract paying end users, they need to assure content creators that their content is secured and accessible only to users who have paid and verified their age. As many of these platforms are mobile-first or cross-platform, integrating a seamless age check into the sign-up process will provide a great customer experience. As many customers making online transactions may be familiar with security precautions to reduce fraud, incorporating identity verification with a face scan and photo ID can customer’s checkout flow will provide the necessary information for an age check.
Many online retailers and age-restricted platforms have relied on an honor system with end users reporting their date of birth. However, with increasing fraud and regulatory fines, businesses need to adopt more robust solutions to ensure that end users are who they claim to be age-appropriate for the goods and services they are purchasing.
Passbase provides a convenient way for your end users to verify their identity, prove their age, and perform quick logins and authentications with a selfie, for your team to manage verifications from a unified dashboard. Businesses can immediately integrate Passbase into their platform via the Passbase API or with SDKs for iOS, Android, and web.