Aristotle's Probe: Consumer Thoughts on Privacy, Identity and Honesty

9 June 2006

Aristotle International, a company that provides age and identity verification in addition to several other services, recently commissioned the first of a series of benchmark surveys on U.S. and U.K. consumer online behavior and has learned some interesting and useful facts.

During the first two weeks of May, the group conducted a survey collecting information on the online behaviors of over 500 British and American citizens. The objective of the research was to provide empirical data that would support the basis on which identity and age verification is being discussed.

"There are some really interesting, but sort of basic questions we wanted to answer," Aristotle's co-founder and CEO, John A. Phillips, explained, "such as how people view privacy, truthfulness and identity when interacting offline and online. Some of the questions we were most interested in finding out were how often do people create a false identity for purposes of protecting their privacy and seeing if that is more prevalent among teenagers or adults, and if there was a difference between the way U.S. and U.K. citizens viewed privacy, identity and honesty with respect to person-identifiable information.

"Many of the questions that we get from companies are questions that can best be answered with empirical data. For instance, a basic question is, 'How do we know that online identity or age verification works, when does it not work and how accurate is it compared to ID an age verification offline?' Also, 'When are consumers willing to provide accurate information and what's the best way to keep kids out of a site?'"

A main objective of Aristotle's survey was to discover what type of information are consumers willing to provide and what types are they unwilling to provide, even if they trust the Web sites to which they're giving the information, and the results showed a great deal of reluctance to provide information involving a social security number.

Another key finding is that 82.7 percent of the survey's 18-20 year-olds reported possessing at least one credit or debit card in their name, and 36.1 percent of the 14-17 year-old respondents reported possessing a card in their name. Such a finding is critical considering that a large number of gambling, pornography, alcohol and other such sites accept the presentation of credit card details as sufficiently valid for access to their site.

Aristotle's research also found that 83 percent of respondents are less likely to provide personal information to Web sites that share information with companies implicated in privacy scandals, and 98 percent reported that they should be notified before their personal information is given to a company with poor privacy practices.

Said Phillips, "If you do verification the right way, people are willing to provide information to Web sites. For the first time in years we're seeing that this constant drumbeat of major security scandals or improper use of data--or in the case of ChoicePoint, highly questionable ethical practices--this blizzard of data has both raised people's anxieties and begun to educate them about what is going on so that they have now for the first time distinct preferences.

"Until recently it was just a blur as to who these shadowy data companies were and what they did, but the profile of the profilers has emerged in the consciousness of the public, and that was strikingly new information."

Following this first survey of online behavior regarding identity and age verification, truthfulness and privacy, Aristotle intends to conduct tracking surveys on a regular basis. The next survey will be completed at the end of summer and will cover the same general subject matter.

Phillips seems open to suggestions from individuals within the industry as to what sort of additional information future surveys should seek.

"To be the most reliable," he said, "we must also be the most informed."

Aristotle's Approach

Aristotle operates an identity verification solution called INTEGRITY, which works by verifying the information provided by consumers against a database of driver licenses, voter records and other ID cards issued from the governments of 157 nations. It can authenticate a consumer's identity both online and in bricks-and-mortar establishments.

Despite its extensive work in the age/ID verification area, the company hasn't often come into the public light. It traditionally hasn't reached out to trade magazines or the public, but its spokespersons say that a rising amount of inquiry from lawmakers and reporters has convinced the company that it is time to be more helpful, particularly with regard to the remote gambling industry. "We get inquiries and interview requests all the time, and because of the very broad nature of our work, particularly in some very politically sensitive areas, typically we just don't do it," Phillips said. "In principle, what we do is very specialized, and the company's profile and reputation is unique, so it didn't help to market the company that way. But more recently, with more and more customers and clients in the gaming space, and so many members of the press needing information about authentication, what it means and all the rest of it, it just became an issue where we were virtually the only ones who covered the whole field but were saying absolutely nothing about it."

Phillips says there is a lot of misunderstanding about what identity verification services are and how they operate. He explains that there are two types of competitors to his company. The first type is credit bureaus, such as Experian, Equifax and Lexis Nexus, which rely upon credit cards and credit reports to authenticate customers. The second type of competitor, aggregators, utilizes some sort of information, which typically comes from credit bureaus, to verify identity. Sometimes aggregators also request back-up verification from INTEGRITY in situations where they require a combined authentication score to prove to a merchant that a person is really who he says he is.

Phillips has identified four main distinctions between INTEGRITY and its competitors. The first is that all of INTEGRITY's identity checks utilize Aristotle's vast database of government-issued IDs, and they in no way access or check credit or other information.

"Government-issued ID is the higher standard in terms of accuracy, and it's why for instance when you go to an airport or bank you have to show a driver's license," Phillips said. "A government ID is more accurate because it means more frequently it will give you a very high match rate. There are very few people who are not even registered to vote or licensed to drive in most countries, whereas credit reports are notoriously inaccurate."

To support his point, Phillips cites a U.S. Federal Trade Commission report from two years ago concluding that about 50 percent of all credit bureau reports contain at least one serious error.

A second distinction between INTEGRITY and credit bureaus is that Web sites that use the credit bureaus systems for verification leave a footprint in the consumer's credit report showing that the consumer visited an online gambling site, or a pornographic site, or a drug, alcohol or tobacco site. Phillips says INTEGRITY doesn't capture or transfer any personal information.

A third distinction is INTEGRITY's coverage area. "Because we rely on government-issued ID, we have much broader coverage globally--not just in the U.S. and U.K., but the entire EU, Canada, Mexico, most of Latin America, much of the Pacific and some parts of Africa and Asia. We can verify identity or age for most citizens of most countries."

A final distinction is that Integrity insures its merchants. "We are so confident in the verification and the ways the laws are written that require this type of verification that Integrity is the only service that insures the merchant in the event he gets prosecuted for underage access or is fined or prosecuted," Phillips explained. "If a site is using Integrity for age verification and we give a green light to someone who is under legal age for that jurisdiction, then we would pay the legal fees and the fine. We can do that with 100 percent certainty, not because the solution is 100 percent effective--no solution is 100 percent effective--but because by checking and verifying the age and identity against government issued ID you are doing exactly what the law requires."