A Look into Biometric ID Verification in the Car Rental Industry
In one research published by La Salle University on ‘Car Rental Industry Fraud,’ a woman in Orange County, California, was charged with fraud for stealing 42 vehicles from a rental agency, exploiting the loyalty or VIP members program by signing up with fake credit cards and stolen driver's licenses online.
A car rental company filed nearly 3,365 police reports each year for car thefts from rentals, as per a report by Inc. One way to cut down on car thefts in the car rental industry is through "KYC.” However, while KYC, or "Know Your Customer," is now a requisite to curb fraudulent or illegal activities, the procedure, if done manually, can be a hassle for businesses and customers. This blog attempts to explain how biometrics work and ways they can expedite the KYC process in car rentals, benefiting both customers and businesses.
Challenges Faced By Car Rental Companies
Authentication Issues: Issues with authentication of documents provided by clients.
Fake Documents: The invalidity or illegitimacy of the information provided by clients.
Identity Theft: Risks related to identity theft and fake IDs. There are often cases of stolen identities, non-payment and vehicle theft.
Data Breaches: Not following through on the rigorous security measures of the car rental business. Some security concerns may include cybersecurity risks to client data and data breaches.
Non-Compliance of Laws: Not complying with the state laws and regulations.
Adhering to state laws and regulations is important for vehicle rental businesses. For instance, crash ratings are important to suggest the safety of the cars, and the vehicles should comply with the regulations. However, 9News highlights an investigation by USA Today that revealed that several vehicles had poor crash ratings. Of the 213 vehicles in car and van rental fleets, 45 had no ratings for front, side, or rear crash tests, and 105 were not tested for roof strength. Only 59 of the model-year 2011 vehicles were classified as "top safety picks" by the Insurance Institute, indicating good performance in all crash tests and electronic stability control.
As a result of the common challenges, car rental businesses often face security vulnerabilities in car rentals, and the customers go through lengthy verification processes that can inconvenience them even further.
What is KYC?
“Know Your Customer”, or KYC is a process through which companies can verify the identity and other credentials of their service users.
Why is KYC Important in the Car Rental Industry?
There are several reasons why many businesses today have adopted KYC as a regulatory process. Some of the reasons are:
It comes in handy in understanding the financial history and assets of the clients.
Provides no scope for fraud under different identities.
It prevents money laundering and other kinds of illegal activity.
Allows businesses to lend cars more confidently.
What are the Disadvantages of Traditional Manual KYC Processes?
There are an array of disadvantages that one needs to keep in mind regarding the traditional manual KYC processes. Some popular drawbacks include:
Lengthy Paperwork: Manual verification of clients requires extensive paperwork and considerable face-to-face interactions with the clients. This can slow down the entire process.
Inaccurate Entries: There is also the risk of inaccurate data entry due to a lack of human efficiency.
Hefty Expenses: Document collection, storage and verification amount to huge expenses for businesses.
Data Breaches: Data and privacy of the clients are also potential concerns, as there are chances of data breaches.
In such cases, the best way to go about the process of ID checks is through biometric verification.
Understanding Biometric Verification
Unlike manual KYC verification, biometric verification makes use of a security system that utilises the unique physical characteristics of the client to confirm their identity in vehicle rental software. These characteristics can include things like fingerprints, facial recognition and iris scans. It is usually preferred by businesses that want to replace passwords and PINs with more convenient options.
How does Biometric Verification Work?
It’s important to note that the physical traits of individuals that are assessed for biometric verification differ from person to person. Here is a simple breakdown of how biometric verification works:
Capturing data: The business first collects biometric data (fingerprints and facial images) from the clients using specialised sensors and cameras.
Extracting data: The data that is captured then goes through an extraction process in which key features and the unique traits of the clients are saved.
Data comparison: The extracted data is then compared with templates and data that is already stored to verify a client’s identity.
Decision: Once the data is compared, a decision is made about whether a client's or individual’s identity is authenticated.
What are the Benefits of Biometric Technology for Car and Van Rental Businesses?
A study done by IProov suggests that 97% of clients look for data privacy, enforced by GDPR and the Data Protection Acts, making biometric security crucial for protection against cyber threats.
Another report by IBM indicated that organisations with fully deployed biometric security and automation have seen an average $3 million reduction in data breach costs. The best part is that the benefits of biometric technology do not end there, here is a thorough brief of biometric verification and its workings:
Efficiency in Verification: With biometric technology, identity verification is now a cakewalk without the need for passwords and PINs.
Better Security: It also provides an added layer of security and reduces the chance of identity theft and unauthorised access.
Client Behaviour and Preferences: Biometric data can tell you a lot about your client’s individual preferences and behaviours. This can help your business tailor its services based on different client needs.
Streamlined Processes: There is no need for checkout counters and employee attendance tracking, as it streamlines the whole process with error rates ranging from 6% to 13%.
Compliance with Laws: It also helps businesses adhere to and comply with their country’s KYC and AML laws.
Data Security: Biometric data collection protects you against an invasion of the client’s privacy, and the collection of data is also within the bounds of what is required for rental access and transactions. There is also no risk of third-party vendors accessing the client data. Biometric data collection also follows protocols concerning encryption and is safe from any kind of manipulation. The KYC data is also deleted regularly from the car rental software when it’s not needed for verification.
Industry Example
As per Harvard Business Review, a car-sharing service, Drivy saw an increase in onboarding and verification of renters and users by 38% due to customer satisfaction with the digital verifying processes. It also provided more protection against car theft as a client’s identity was linked and saved during the rental. Observing such tangible results, other car rental companies, like Hertz and Avis, also followed suit.
What is the Future of Biometrics in the Vehicle Rental Industry?
Given the rapid advancement that we witness today, one can expect that the authentication process will get more streamlined over time. Apart from providing more security, biometric technology may be leveraged to ditch the need for keys and extensive paperwork. Also, by preventing the risk of theft and unauthorised access, it will take off the burden and worries of lots of businesses.
With advanced biometric technology, clients may even be able to unlock or rent their cars without keys or even from an app.
Coastr’s Partnership with Credas:
Coastr and Credas have partnered to bring advanced technology to your disposal. The collaboration strives to enhance and streamline KYC processes for businesses through biometric verification. The partnership leverages the full-stack shared mobility software ecosystem of Coastr integrated with the new-age facial recognition technology of Credas for real-time ID checks.
Used in over 40 different sectors, Credas ID verification is trusted by major corporations like Strike, Deloitte, and Connells Group. The technology ensures the presence of individuals when submitting documents, and verifies them against the data that is submitted.
Tim Barnett, CEO of Credas, shares his enthusiasm for the partnership and expresses,
“We are excited to begin this groundbreaking partnership with Coastr, a company at the forefront of the digital transformation of the automotive industry. Our collaboration will play a pivotal role in reshaping the landscape of car rental and shared mobility, enhancing security, streamlining booking processes, and ultimately reducing the risks associated with fraud and identity theft within the sector.”
Why Choose Coastr?
Car rental, subscription, and leasing firms can now use the customer details page on Coastr’s car and van rental software to verify their customer’s identities.
There’s no longer a need to be under the gun about thefts and fraudulent activities. Businesses will now be able to validate over 4000 types of identity documents against 50+ PEPs/sanctions lists without any concerns.
Screen renters in compliance with international KYC standards, leveraging cutting-edge facial recognition technology.
Seamless handling of client onboarding and real-time ID monitoring for fleet safety.
Easier booking process with no need for manual ID verification or exhaustive paperwork.