Receive the latest articles for free. Click here to get the Mobile Commerce Daily newsletters.

Challenge of selling age-restricted goods on mobile

By
June 1, 2016

Michael Hagen is managing director and corporate ID strategist of Mitek

Michael Hagen is managing director and corporate ID strategist of Mitek

By Michael Hagen

A recent Shop.org and Forrester Research survey indicates that smartphone sales accounted for 17 percent of total retail sales in 2015, and that sales from smartphone devices grew 53 percent year-over-year.

Moreover, Forrester projects that retail sales on smartphones and tablets will have totaled $115 billion in 2015.

Taking advantage of this tremendous growth opportunity is a little more challenging for businesses selling age-restricted goods and services.

Retailers of these goods must verify a customer’s age to meet strict federal regulations, guard their reputations and protect the standards of the communities they serve.

Studies have shown that current mobile age-verification techniques are not adequate and are failing to limit access to age-restricted goods and content.

In fact, a University of North Carolina study found that 45 out of 100 online orders of alcohol by underage buyers were successful, even when they provided their real underage license when asked.

Industries requiring mobile ID verification solutions
It is clear that retailers dealing in age-restricted goods must implement better mobile identity verification solutions to meet regulatory requirements and protect themselves from legal ramifications.

The online gaming industry has already started implementing ID verification solutions to prevent crime, money laundering and ensure that players are 18 or older when issuing payments.

Previously, online gaming sites relied solely on user provided data and information from debit and credit cards, which is unreliable since users under 18 can obtain a debit card.

Tobacco is another age-restricted product that is heavily regulated.

The Prevent All Cigarette Trafficking (PACT) Act requires tobacco online retailers to verify the age and identity of a customer before accepting an order.

To meet these requirements, a top tobacco retailer in the United States has implemented a process that requires mobile users who want to enter their site to take a photo of the back of their drivers’ license, which automatically provides their date of birth.

E-cigarettes must also be regulated since sales to minors are banned in at least 40 states, and sites must regulate purchases and certain content.

A study by the UNC Lineberger Comprehensive Cancer Center found that minors in North Carolina bought e-cigarettes online with no age verification in about 94 percent of attempts.

In addition, online sale of alcohol to minors has become a prevalent issue since age-verification procedures do not adequately prevent these transactions.

Underage buyers are able to use their real ID and a prepaid Visa card to place an order for alcohol in just a few minutes and often have it delivered to their door in a matter of days without anyone ever trying to verify their age.

Lastly, many popular video games cannot be sold to minors, and some major retailers such as Walmart and GameStop check IDs before selling mature-rated games.

However, purchasing an M-rated game online is simple for a resourceful minor with a gift card or access to a credit card. If these mobile retailers implemented a mobile ID verification system, minors would need to take a photo of their ID proving they are 18 or older, prior to purchase.

Emerging technologies can help
By leveraging the camera in mobile devices, mobile merchants of age-restricted goods can accurately verify a customer’s age using ID verification.

The process is simple.

To verify your age, a buyer simply takes a photo of her government-issued ID and the technology scans it to ensure it is a genuine unaltered ID and to determine whether the age meets the requirements of the goods being sold.

The process is almost instant, so buyers who are of legal age will not be driven away by system designed to catch a few bad apples.

Mobile ID verification technology has been tested and proven to accurately verify customers’ identities and their ages, while maintaining a fast and easy mobile experience.

Customers are familiar with using their ID to confirm their identity in both the mobile medium and in-person at bricks-and-mortar stores.

The difference is that the mobile medium’s method has higher accuracy rates.

Merchants can protect themselves by taking advantage of facial comparison technology that confirms that the person holding the government-issued ID is the person buying the goods or services.

By requiring the buyer to snap a selfie, merchants can be fairly certain that the person placing the order is the person paying for the goods and is old enough to do so.

RETAILERS SELLING age-restricted goods should investigate the latest mobile ID verification technologies to quickly and easily ensure that their buyers are legitimate and protect their organizations from fraud and prosecution.

By using mobile verification, systems can be built to expose only the data needed to complete or confirm a transaction.

This reassures customers that they are protected by only exposing data from their ID such as age and name that is relevant to the purchase.

These types of solutions will be something we see more in the future and will continue to expand the need, fraud prevention ability and accuracy of customer’s data in the mobile medium.

Most importantly, incorporating mobile ID verification technology will allow more retailers to expand into the mobile marketplace where 38 percent of online transactions are expected to occur by the end of the year.

Michael Hagen is managing director and corporate ID strategist of Mitek, San Diego. Reach him at mhagen@miteksystems.com.

Share on FacebookShare on LinkedInShare on Twitter



Like this article? Sign up for a free subscription to Mobile Commerce Daily's must-read newsletters. Click here!






Tags: , , , , , , ,

You can leave a response, or trackback from your own site.

Leave a Reply