Credit Card Applications - Identity Verification – Beware the Options (2024)

We live in an age, certainly a banking age, when identity verification is not only essential but often required by regulation.

Identity verification is simply the process of confirming that someone is who they say they are. This is typically achieved by requiring an individual to submit a valid form of identification (e.g., driver’s license, passport photo page or a copy of a resident certificate or ID card. Biometric information like fingerprints or facial recognition are also becoming the norm.

Verification can also be as simple as asking a few pre-chosen security questions. Even entering a password or entering a code sent to a designated email address or mobile device via SMS will normally qualify as appropriate identity verification.

There can be various reasons why identity verification is necessary in both the public and private sectors. For example, in the public sector, verifying your identity is required for the issuance of passports or driver's licenses.

The private sector uses identity verification to safeguard customers, companies and data from fraud and identity theft.

One example is when banks and other financial institutions require customers to complete an identity verification process when applying for a credit card.

This involves an applicant for a new credit card expressing concern with one of the optional methods of identity verification. It should be stressed that there were, at least, optional methods.

However, one of the options in this situation involved providing the full details of an existing credit card from a designated list of other banks. Full details, in this case, means not only the full name of the card holder, number of the credit card and expiration date but also theCVV2 (Card Verification Value 2)which is a 3-digit security code that is printed on the back of a credit card.

In effect, the credit card applicant is given the option to provide the bank with every detail of an existing credit card with another bank. Admittedly, banks are held to very high standards of data privacy protection, but banks are also subject to cyber-attacks and there is no shortage of examples of banks admitting to data leaks due to such attacks. The leaked data often includes customer data (which is really what the hacker is after) and there is very real potential of financial loss due to such attacks to both the customer and the bank.

The real question of this article is to question why a bank would, in a world of daily cyber-attacks against banks choose to provide such a potentially risky identity verification option? If the credit card customer chooses that option, then any successful cyber-attack on the bank opens up the possibility of the customer’s data being at risk with 2 banks.

It simply does not make sense. It is bewildering and inexplicable. To those applying for a credit card or any financial instrument that either provides the option of, or requires, your data from another bank, either choose another option or walk away!