Traditional methods of electronic identity verification use a two phase approach. The first phase asks the user to show “this is who I am” using name, date of birth, address, phone number, and social security number. The second phase challenges the user to prove who they are by assembling questions from that person’s past, often called Knowledge-based Authentication (KBA).
KBA has been an industry standard for over a decade. Unfortunately fraud-mitigation techniques become stale as fraudulent actors find ways around them. While KBA can be tuned to increase efficacy, such as limiting the time permitted to respond to questions and limiting the number of attempts a user has to retry failed question sets, fraudulent actors have augmented black markets to include information that can be used to pass KBA questions.
Even as early as 2010, Gartner warned clients that “criminals can get their hands on anyone’s KBA or identity information through the black market exchanges.” To make matters worse for KBA, Gartner notes that businesses experience KBA failure rates up to 30% depending on the population. For every KBA failure, authentic users may be turned away or required to pass a costly manual process if they are willing to go through the hassle.
With a traditional verification, only information needs to be compromised. With Cognito, possession of a person’s phone or compromising the phone network is required to pass user authentication.
Cognito exceeds traditional ID verification and KBA in the following ways.
Near ubiquity. Nearly everyone in the US has a phone number
Provable possession. By sending a text message or placing an automated call, you can prove the person is in control of the phone number associated with their identity records
Low friction. It is much easier to verify and authenticate possession of a phone than to answer intrusive financial questions that the user often does not remember
Secure. Compromising a phone adds a layer of complexity outside of just purchasing KBA information through the same black market that sells identity information
Fraudsters use the path of least resistance to commit fraud and test exploits en masse. Millions of identities are trafficked through black markets and used to create fake accounts. While KBA does add a layer of difficulty, a very small hit rate can yield a lucrative return on stolen identity information. Because Cognito requires possession of a device in addition to compromised identity information, black market identity information isn’t sufficient to pass a Cognito verification.