3 Geographically-Diverse Regulations in the Global Identity Verification Market

Identity Verification Market - Inkwood Research

Identity verification is essential for businesses to protect their consumer’s personal information from data breaches and fraud. Equally important is complying with identity verification regulations. This will help prevent account takeover, identity theft, and other forms of fraud. For instance, as per the latest Federal Trade Commission (FTC) data, consumers reported a loss of nearly $8.8 billion in fraud in 2022, up by 30% over 2021. Imposter scams rendered the second-highest reported loss, incurring losses of around $2.6 billion. According to Inkwood Research, the global identity verification market is expected to register a CAGR of 15.57% during 2023-2032 and garner $37772.09 million in revenue by 2032

Further, compliance with identity verification regulations will aid businesses in implementing effective identity verification processes. In addition, it will enable businesses to establish trust with consumers by showcasing their gravity and priority toward serious data protection. 

At the same time, failing to comply with regulations can result in reputational damage, legal action, and fines. 

 

This blog examines 3 geographically-diverse identity verification regulations for different industry verticals. 

    1. Electronic Identification, Authentication and Trust Services (eIDAS)

The eIDAS regulation helps public authorities, citizens, and businesses to carry out seamless & secure electronic interactions. It facilitates a European internal market for trust services to ensure their working and the same legal status across borders as their conventional paper-based equivalent. Also, the regulation makes sure that businesses and people use their own national electronic identification schemes (eIDs) to access online public services in other EU nations. 

Further, eIDAS offers benefits for European government services, businesses, and citizens. 

For instance, for financial services businesses, it facilitates:

  • Improved document tracking
  • Minimal time for document exchange
  • Decreased costs through streamlined processes 
  • Compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations 

 

    2. California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act of 2018 (CCPA) offers consumers more control over the personal information businesses collect. This act secures new privacy rights for California consumers.  

These include:

  • Right to non-discrimination for exerting their CCPA rights
  • Right to delete personal information 
  • Right to know about how personal information is used and shared
  • Right to opt out of sharing their personal information

Moroever, the CCPA was amended in November 2020 and added additional privacy protections effective from January 1st, 2023.

The new rights include:

  • Right to limit the disclosure and use of sensitive personal information 
  • Right to correct the imprecise personal information provided 

The CCPA applies to several businesses, including data brokers. Also, the businesses subject to the CCPA have many obligations, like giving notices to consumers explaining their privacy practices and responding to consumer requests about exercising the aforementioned rights. 

 

    3. Personal Information Protection and Electronic Documents Act (PIPEDA)

The Personal Information Protection and Electronic Documents Act (PIPEDA) applies to private-sector organizations across Canada that collect, disclose, or use personal information for commercial activities. A commercial activity, as per PIPEDA, is any regular course of conduct or any particular act, conduct, or transaction of a commercial nature. This includes the sale, lease, or barter of membership, donor, or other fundraising lists. 

In addition, businesses operating in Canada and handling personal information that crosses national or provincial borders for commercial activities are subject to PIPEDA, irrespective of the territory or province of their base. 

Whereas federally-regulated organizations conducting business in Canada are always subject to PIPEDA. 

These organizations include:

  • telecommunications companies
  • offshore drilling operations
  • airports, airlines, and aircraft
  • inter-provincial or international transportation companies
  • banks and authorized foreign banks
  • radio and television broadcasters

Moreover, the Personal Information Protection and Electronic Documents Act (PIPEDA) obligates that organizations obtain individuals’ consent while collecting, disclosing, or using their personal information. Also, personal information can only be used for the purpose it was collected. For other unintended purposes, organizations must obtain consent. 

But how does PIPEDA define personal information?

PIPEDA describes personal information as any subjective or factual information, recorded or unrecorded, about an identifiable individual. 

This includes the following information:

  • Medical records, credit records, employee files, disputes between the merchant and the consumer, loan records, intentions
  • Disciplinary actions, social status, evaluations, comments, opinions
  • Blood type, ethnic origin, income, ID numbers, name, age

The impartial & independent investigations into the personal information handling practices of businesses subject to PIPEDA are undertaken by the Office of the Privacy Commissioner of Canada (OPC). It publishes a selection of case findings and summaries from its investigations to offer tangible examples of the application of PIPEDA to businesses’ daily management of personal information. 

 

Future of Identity Verification Market Regulations

Evolving technology will accelerate the need for updated regulations to tackle new forms of identity theft and fraud. Accordingly, the future of identity verification regulations will be directed by an increased focus on data transparency, security, and privacy. This will further require companies to ensure compliance, reliability, and efficiency of their identity verification processes. 

Such obligations will require partnering with third-party providers and investments in new technologies. Overall, geographically-diverse regulations’ influence will be vigorous in directing the course of the global identity verification market growth.

By Akhil Nair

FAQs:

What are the key challenges businesses face regarding identity verification?

Businesses often encounter challenges like ensuring user convenience while maintaining security, staying compliant with evolving regulations (such as GDPR and KYC/AML), preventing identity theft, and adapting to new technologies that can undermine traditional verification methods.

What should businesses consider when choosing an identity verification solution provider?

When selecting an identity verification solution provider, businesses should consider factors such as the provider's expertise in security and compliance, the range of verification methods offered, scalability to accommodate business growth, ease of integration with existing systems, and the flexibility to adapt to changing regulations and fraud trends.