The definitive guide to customer identity verification  

Trust is the foundation of every digital interaction, but in an era of escalating cyber threats, it must be earned—not assumed. Can you confidently say that the person accessing your service is who they claim to be? Fraudsters are continuously devising new strategies to exploit vulnerabilities, leading to substantial financial losses for companies. Beyond financial damage, failure to comply with regulatory standards can result in severe legal consequences. In this landscape, deploying a robust and reliable customer verification API has shifted from a competitive advantage to an operational necessity. 

The facts bear out the challenges organizations face today. The FBI reported receiving nearly 900,000 public cybercrime complaints in just one year. A Mastercard analysis uncovered that billions of dollars in fraud losses can occur in a single year, and the scope of the threat only continues to widen. It is predicted that the cumulative losses to online payment fraud, globally, will total more than $343 billion by 2027. 

Some attack methods are also on the rise. Account takeovers (ATO) have affected almost 29% of people surveyed, representing a 22% increase since a prior study in 2021. It’s clear that businesses and their customers face serious effects from fraud. 

For these reasons, intelligent, seamless customer identity verification is vital. Customers want to keep their accounts secure while enjoying the convenience of a seamless and quick sign-in or validation procedure. Businesses must obey regulatory requirements and protect users’ and their own interests at the same time.  

This article examines the facts about customer verification and explores the impact of technology on the process. We’ll also illuminate how your company can strengthen its approach to this mission-critical task with Telesign solutions for identity verification in a global, omnichannel environment. Discover how organizations can enhance fraud protection and deliver seamless user experiences across channels with our powerful Verify API solution and learn about your next steps.  

Table of Contents

• What is customer verification? 
• The benefits of reliable user verification 
• Top challenges in consumer identity verification 
• Digital identity verification trends for 2025 
• The role of APIs in customer verification 
• Features to look for in an API to verify customer identity  
• How artificial intelligence impacts verification 
• Best practices for user verification implementation 
• Explore the Telesign Verify API 
• Strengthen your approach to identity verification today 

What is customer verification? 

To begin, one must understand what identity verification is, why we engage with the process and what’s typically used in such workflows today. Although the technology and techniques used can be quite complex, the actual process that the consumer faces should seem simple. Here’s what to know first. 

Customer verification defined 

Customer identity verification is a security-minded procedure that enables businesses to prevent fraud, meet regulatory requirements, and secure user accounts and information. It is the process a business uses to confirm that interactions with the organization truly originate from the person or organization they claim to represent. Businesses today use advanced technology to verify customer identities, with as much certainty as possible. 

The process can be as simple as confirming that a given user owns a particular account or as in-depth as using identity verification technology to check that a user’s supplied credentials match some government databases. Verification is an essential process that must take place before any grant of authorization or access to systems, resources, accounts and other digital assets.  

Why customer verification matters 

Why make the effort to verify customers consistently? One of the most important answers is also obvious: it’s central to creating trust between organizations and customers. If you don’t handle a user’s information safely and verify that they’re behind any action on the account, you could expose those users to risks, including identity theft and financial losses. 

Your organization can suffer similarly adverse effects from bad actors. A lack of or inferior customer verification opens the door to account takeovers, fake account creation, spam and even fraud. Whether these issues consume resources or lead to fraud-related losses, neither outcome is conducive to doing business successfully. 

Regulations in numerous industries, especially those connected to finance and banking, require organizations to use identity verification solutions. These rules include Know Your Customer (KYC) regulations and anti-money laundering (AML) regulations. If you don’t take steps to verify a customer’s identity, you could inadvertently facilitate criminal activities. Therefore, verification is unavoidable in building trust, guarding against fraud, and meeting legal requirements. 

Today’s key methods for verification 

Technology facilitates several different ways to verify modern customers. Many organizations use a combination of methods. The right approach can vary based on regulatory needs, industry verticals, etc. There are two major methodologies to know: passive and active verification. Passive verification does not engage the user and can involve techniques such as behavior analysis. Active verification can require individuals to submit information, such as selfies or ID documents.  

Method 1: Passive verification 

In passive verification, a user’s proactive participation is unnecessary to confirm their identity. Passive methods use data analysis to determine if a user’s behaviors and presentation match patterns known to belong to the authentic individual. Passive verification can also play a background role in active verification procedures, but not always. 

This method could include reviewing patterns related to user interactions with a website, supposing the user makes the necessary allowances on their device. A passive verification may look at information such as: 

Unexpected differences from prior interactions or anomalous behavior raise a red flag and signal that the user might not be the genuine account holder. A customer identity verification API makes passive verifications a simple matter to conduct. 

Method 2: Active verification 

In contrast, active verification requires users to engage in a process to confirm their identity.  Users actively provide this information, which a business compares against a trusted and secure source of record. Some approaches to active verification include: 

Even the collection of birthday information can be a form of active verification. Again, identity verification APIs can connect to the appropriate systems to verify that the supplied data or documents match the information in government databases. 

Combining both methods at different times can provide the most effective methodology  

The benefits of reliable user verification

As you explore consumer verification services and how to set up secure customer onboarding in your business, consider the benefits your efforts can unlock. 

Security 

Cybercrime causes billions of dollars in losses every year. Fraud harms businesses and disrupts the lives of consumers. Identity theft can have effects that last for years, and account takeovers can do far more damage than the spread of spam on social media. For example, an individual could lose their life savings if a takeover occurs with their bank account. Identity verification fights back against the full range of threats that challenge account security. Better solutions equal peace of mind for your business and customers. 

Compliance 

In regulated industries, verification supports compliance. Know Your Customer (KYC) and anti-money laundering regulations are serious. Violations can be grave if your organization knowingly or unknowingly allows fraudsters to use your services. Fines for violations can stretch into hundreds or even millions of dollars. Avoiding such high financial risk is in your organization’s best interest. 

Customer experience improvements 

Innovative, reliable verification procedures do more than provide peace of mind for your users. They also enable a more streamlined approach to processes such as onboarding. When a customer wants to place an order or do a financial transaction, verification that works silently in the background delivers a frictionless process users love. Sign-up processes for your service can become much faster and more reliable. They enable you to weed out potentially fraudulent account creation requests while letting your verified users through to the next stage. 

Controlled costs 

Robust customer verification API solutions ultimately lead to enhanced cost-effectiveness for your operations. Without the rapid capabilities possible through automation and modern technology, manual verification must occur instead. Especially for KYC/AML procedures, such efforts can consume large amounts of time and effort. Manual workflows are often a significant source of human errors and mistakes that could lead to verification oversights. Technology accelerates the process, enhances confidence, and saves money—all at the same time. 

Top challenges in consumer identity verification 

Verification is fundamental to safe, secure online transactions and proper compliance, but that doesn’t mean it’s always a simple process. Some challenges remain. Good technology, thorough plans, and a proactive focus on creating strong and reliable procedures can help address those challenges. First, you need to know what you’re up against; here’s a quick review of the three core areas of concern you’ll need to navigate. 

Telesign’s Verify API checks each of these boxes. It delivers seamless user verification via their preferred communication channels with automatic failovers to back up delivery methods when necessary. Telesign continuously updates its software and monitors the threat environment to change procedures when new fraud techniques develop. Telesign also has a clear and precise viewpoint on compliance to support customer verification in any region. 

Digital identity verification trends for 2025 

Customer verification is a global priority, driving ongoing research and innovation to strengthen strategies. Emerging technologies and new solutions are shaping the present and future of identity verification. What key trends are influencing this space today? 

AI and machine learning 

Even the most sophisticated systems and human intervention can’t detect all the potential ways fraud can occur. Savvy threat actors and their technology or techniques can obfuscate and obscure fraudulent actions. Artificial intelligence (AI) and machine learning solutions currently lead the way in the fight against such problems. 

With AI/ML, it’s possible to analyze hundreds or even thousands of potential signals and indicators pointing to the potential for fraud. Anti-fraud models can use large volumes of data to identify anomalous behavior and suspicious activity. As an always-on solution, AI never needs to take a break: it’s always ready to monitor customer interactions and enhance the security of identification procedures. Over time and with more data, these models can become more adept at fraud detection. 

Blockchain applications 

Blockchains and their immutable ledgers are a target of research and development in the identity verification space. Increased interest in decentralized identity management and the Self-sovereign Identity (SSI) concept means more efforts are now concentrated in this area. In these applications, users maintain control over what elements of their identity they share with others. 

Public and private key cryptography manages decentralized approaches rather than relying on a third-party organization to maintain such credentials. Issuers, such as governments or businesses, provide credentials to users and write information to the blockchain. When the user needs to verify their identity, they present the credentials of their choice to the organization, which can then check the blockchain ledger to confirm that the data matches and is unaltered. Blockchain applications may have a significant role in the future of zero-trust security environments. 

Behavioral biometrics 

This trend pushes biometric identification to the next level. In traditional biometrics, a user’s physical characteristics are a part of the verification procedure. It includes elements such as a user’s fingerprint or face. However, in behavioral biometrics, systems examine how individual users interact with digital identity environments. Rather than fingerprints, this methodology might consider the patterns present in the way a user types, how someone navigates a website or app and even how they swipe around a touchscreen. These can all provide signals for behavioral analysis. 

When a system detects that a user’s behavioral biometrics don’t match expected patterns, it can flag potential fraud. Substantial differences might lead to an additional verification challenge or even the removal of access to a system. In combination with AI and other technologies, this next generation of biometrics may have a central role to play. 

With Telesign solutions, businesses can tap into cutting-edge customer verification solutions. We continuously invest in improvements and innovations, including incorporating AI/ML into products such as Intelligence and Verify API. 

The role of APIs in customer verification 

So far, we’ve discussed the basics of customer verification and mentioned the usefulness of APIs in this process. Let’s focus on these software applications and how they provide the framework for modern customer verifications. 

What is a customer verification API? 

An application programming interface (API), at its most basic level, is a way to bridge the gap between different software, servers, and systems. APIs facilitate the secure passage of information back and forth between systems to power a wide range of functionality. A customer verification API provides a means to integrate different methods to verify a user’s identity when interacting with a business online. An API facilitates the collection of identity information and communicating that information for verification purposes. 

Let’s consider a simple example. A user wants to log in to their account. Yet, you need to be sure that a user who has enabled multifactor authentication is the right person.  The user’s login attempt triggers an event that sends a one-time code to that user’s device through the API. When the user enters their code, the data flows back through the API which validates the result.  Upon confirmation of identity, the user can access the account. 

There are other ways to use an API for identity verification, too. For example, banks and institutions subject to KYC/AML regulations may use a document verification API to handle a user submission of an item such as a scanned driver’s license. The API could extract that information, communicate with a database that can confirm its validity, and return the result to the business. 

APIs can facilitate multiple approaches to verification based on circumstances and needs. Aside from using SMS to send a one-time password, a verification API could also send validation emails, collect and confirm matches between biometric data, and more. Advanced solutions can integrate with machine learning and AI models for enhanced fraud detection. Just one API, such as Telesign’s Verify API, can provide connections to multiple channels and verification methods. 

What are the benefits of API usage? 

Using an API for customer verification offers benefits that can prove valuable to modern organizations, not just because they simplify compliance. They also provide advantages that include: 

APIs strengthen security, offer ease of use and reduce friction in verification processes. 

Features to look for in an API to verify customer identity  

APIs are a beneficial solution to power verification workflows. How do you select a solution that aligns with your requirements, from a good UX to regulatory compliance? It helps to know what to look for as you explore the market and evaluate your options. Review some of the most important factors to consider: 

How artificial intelligence impacts verification 

Artificial intelligence and machine learning technologies have advanced significantly in recent years. Further significant improvements are likely to occur in the near and long term. AI already impacted the customer identity verification process considerably. As intruders become more sophisticated, the deep learning and analytical capabilities of AI models will be a valuable asset in the effort to close off potential attack vectors. How can AI help? 

AI/ML models can ingest massive amounts of data and learn to detect patterns based on many details. Even in a simple identification procedure, an AI model can monitor many information signals to support better customer verification. What are some of the more specific features AI offers? 

AI models can learn how users usually behave and interact with an organization. When those behaviors don’t match the model’s expectations, it can flag such actions as an anomaly. With greater confidence, an AI model may even designate actions as threats and trigger events that lock down and secure an account or restricted resources.  

Events that could raise flags include log-in events from unusual or remote locations, sudden high-value transactions or even deviations in standard purchase patterns. Humans can’t easily detect these patterns, but an AI trained to detect fraud can find them rapidly. 

AI can also enable predictive analytics to look at factors that indicate a higher risk of fraud even before a user completes an action. High-risk users can include brand-new accounts, accounts with recently-changed passwords and accounts accessed from a new location. Sudden changes in shipping or billing information or transactions with an unusually high total can also be a red flag in AI analysis.  

The real-time nature of such analysis is the most valuable part of AI applications. These solutions can process verification data and flag risky behavior nearly instantly. The sooner you can identify and stop potential fraud, the better your organization can protect itself. 

Best practices for user verification implementation 

What does it take to successfully implement a new customer verification API? Look for API and identity verification providers that deliver exceptional performance and have a proven track record of success, such as Telesign. 

Remember that you must consider balancing the cost and resources associated with API calls and usage with your need for greater security. Here are a few quick tips to keep in mind as you integrate and implement your solution. 

With a reliable partner and the latest technology, you can implement an API system that is safe, secure, and supports regulatory compliance for identity verification. 

Explore the Telesign Verify API 

For businesses that require a versatile, scalable and highly reliable verification solution, Verify API delivers the functionality your organization needs today.  

Verify API unifies seven different verification channels under one API endpoint. That lets you reach your users where they are today and where they will be tomorrow. Connect only to the channels you need right now, such as SMS verification, and continue to expand to other channels as your needs or audience change.  

Telesign’s Verify API is highly secure and built to deliver a high level of reliability while users receive a simple, streamlined experience that makes verification fast and simple. Verify API also supports custom routing for global communications strategies that helps keep costs under control without impacting security. 

The way it works is simple: 

This seamless process is familiar to users and easy for them to navigate. It’s an effective way to verify and secure customer onboarding. It provides the necessary means to protect your business and your customers from account takeovers and fraud. This API also integrates quickly into your current systems for a faster ROI and better protection against bad actors.  

Telesign in action: a real-world use case 

Telesign delivers reliable fraud protection solutions for many major clients worldwide in support of more competent, safer operations. Consider one success story involving our identity verification API and a multinational corporation. 

Ubisoft is a billion-dollar company engaged in developing and publishing video games, including online and multiplayer experiences. Ubisoft desired a smarter, stronger way to secure user accounts in an environment rife with the potential for fraudulent takeovers from threat actors, would-be cheaters and more. The company partnered with Telesign to offer users a way to enable multifactor authentication with their mobile devices. 

With over 140 million players worldwide, Ubisoft is interested in maintaining a safe, secure and reliable digital experience. Ubisoft worked with Telesign to equip customer accounts with mobile phone number verification options to enhance account security. Adding a phone number to account details provides additional protection, and another means to verify that a sign-in comes from a valid account holder. 

Ubisoft also leverages Intelligence to avoid money wasted on SMS messages sent to undeliverable destinations, such as landlines or a potentially fraudulent/fake phone number. Machine learning supplied by Telesign also flags risky SMS traffic to cut off more attack vectors. 

Together, Telesign and Ubisoft deliver a better user experience that enhances security and reduces fraud for the developer. 

Strengthen your approach to identity verification today 

With billions of dollars in fraud losses and millions of individuals affected by bad actors, there is a clear need for stronger, more robust security online. To preserve the reliability and sanctity of digital transactions, businesses and customers need a means of establishing trust. Without the explicit knowledge that a customer is who they claim to be, your organization could leave the door open for identity theft, account takeovers, financial losses and more. 

A robust means of customer verification is central to both efforts to protect your business and to provide the best customer experience possible. Consider your current approach to verification processes. Are they as agile and reliable as you’d like, or is there room to improve outcomes for all parties? As technology advances and new AI-powered solutions mature, organizations must proactively recognize opportunities to improve. 

With Verify API, you can reach your customers through their preferred channels. You can create a unified, seamless experience that also leverages the power of AI and machine learning for stronger, safer experiences. Meet compliance requirements, keep fraudsters away from user accounts and build trust through easy verification experiences. Connect with the Telesign team today to learn more about how you can improve your customer identity verification processes in your business today.