Trulioo claims huge increase in KYB adoption as US tightens ID verification requirements

KYC firm Trulioo claims to have seen a 586 percent increase in Know Your Business (KYB) adoption, ahead of the implementation of the U.S.’ new INFORM Consumers Act, which came into play today.

The new legislation will force e-commerce platforms to collect more information about the identity of their high-volume sellers, with potential civil penalties of $50,120 per violation on the table for online marketplaces.

Online marketplaces, including some of the largest such as Amazon, eBay, and Etsy, will need to collect and verify data such as bank account information, working contact information, and a tax ID number from these third-party sellers.

In addition, online marketplaces will be required to disclose certain specific information about the seller, as well as put measures in place to suspend sellers that don’t provide the information the law requires and for consumers to report suspicious conduct.

As per the Federal Trade Commission’s guidance, the exact definition of a high-volume seller differs from state to state but generally covers sellers who have made 200 or more separate sales or transactions of new or unused consumer products, and $5,000 or more in gross revenue over the past 12 months.

Once sellers reach the threshold, ecommerce platforms are given 10 business days to complete identity verification and KYB checks, which Trulioo says is a difficult time frame to meet with manual KYB processes.

This data will need to be updated regularly under the new law, at least annually.

Consumers are generally supportive of steps taken by online marketplaces to shore up digital identity verification, at least according to statistics released by Trulioo.

Fifty-seven percent of respondents said they had become more tolerant of identity verification processes, while 85 percent of respondents said online brands that “meaningfully invest” in identity verification demonstrate they care about their customers.

Third-party seller fraud is unfortunately a common issue impacting consumers in the U.S.

A survey put together by consumer credit reporting agency TransUnion found that nearly a third — 28 per cent — of fraud victims have been targeted by third-party seller scams, making this variety of fraud supposedly even more commonplace than mainstays such as stolen cards or identity theft.

According to The Office of the United States Trade Representative, this type of fraud often impacts consumers buying a designer item from a third-party seller on a large platform, only for a lower-quality counterfeit item to arrive later.

The latest bill received some support from one of the world’s largest retailers before it was written into law.

In 2021, Amazon claimed that the bill would “would protect consumers and small businesses”, later throwing shade at the current “unworkable patchwork of state-level regulations.”

The e-commerce behemoth also alleged that lobbying groups such as the Retail Industry Leaders Association and the Buy Safe America Coalition, as well as rival retailers such as Walmart and Best Buy, supported different state and federal legislation, saying the “real purpose” of these measures was “to favor large brick-and-mortar retailers at the expense of small businesses that sell online.”

Amazon itself has been hit by this type of third-party seller fraud. In March 2022, a California man was found guilty of defrauding $1.3 million from Amazon involving a fake sale-and-refund fraud involving his third-party seller business.

Article Topics

biometrics  |  ecommerce  |  fraud prevention  |  identity verification  |  KYB  |  KYC  |  legislation  |  Trulioo