Customer verification (also know as 'Know Your Customer' or 'Customer Due Diligence') has always been an important aspect of the automotive industry, whether it is traditional car sales, rental, or leasing, and remains equally important in car subscription services.

The process involves verifying the identity of the customer before the transaction takes place. This is done for various reasons, including preventing fraud and protecting the interests of the dealership or rental company.

Speed, scale, automation and accuracy

For customer verification to function appropriate within a car subscription business model, it needs to be achieved with an acceptable level of speed, scale, automation, and accuracy. Unlike traditional car sales or rental models, car subscription services typically involve a larger volume of customers and transactions with little or no manual intervention, which means that the verification process needs to be efficient and effective.

To achieve this level of scale, car subscription services often leverage digital tools and automation. For example, electronic verification tools can quickly and securely verify a customer's identity and creditworthiness without the need for manual effort. This can help to streamline the verification process and reduce the risk of errors or delays.

In addition, car subscription services may use machine learning algorithms and other advanced analytics tools to analyze customer data and assess their risk profile. This can help to automate the verification process and make it more accurate by identifying potential fraud or credit risks.

Finally, car subscription services may also leverage partnerships with third-party verification providers to further automate and streamline the process. These providers can offer specialized tools and expertise to verify customer identities and assess creditworthiness, which can help to reduce the workload on the subscription service and improve the accuracy of the verification process.

Levels of Customer Verification

Level 1: Requesting identifying documentation

This is the most basic form of customer verification and typically involves having the customer present identifying documents such as their driver's license or other government-issued identification for manual verification.

While this level of verification may be suitable for low-risk transactions and customers, it may not provide enough protection for a car subscription business with a higher risk customer base.

In addition to the risks of human error and fraud, basic verification may also be vulnerable to identity theft or synthetic identity fraud. In these cases, fraudsters may use stolen or falsified information to create a new identity that can pass basic verification checks.

To mitigate these risks, a car subscription business may consider using additional verification methods, such as regular or enhanced verification.

Level 2: Verify an identifying document is valid

This method of customer verification typically involves more rigorous methods to confirm not only that they are in possession of the identifying documents, such as a driver's license or passport, but also that these documents are valid and authentic. One of the most common methods is to cross-reference these documents against government databases to ensure they are valid and not fraudulent.

For example, a car subscription business may use a software application to scan and verify the authenticity of the customer's driver's license or passport. The software may then cross-reference this information against government databases to ensure that the information provided matches the official records.

This type of customer verification is most recommended for any car subscription provider as it offers a high level of automation and accuracy.

There are limitations however, and this method can help confirm the legitimacy of a document, this does not necessarily confirm that the applicant is who they claim to be.

Level 3: Confirm they're the identifying document holder

The most robust method of customer verification involves using unique physical or behavioral characteristics to confirm that a customer is who they claim to be.

For example, this can be achieved by using facial recognition technology to ensure that the applicant matches the face depicted on the provided driver's license. Some providers can also perform a liveness test to ensure an actual person is being verified, and not just a photo of that person.

This method has the benefits of being robust yet still automated and efficient, however are typically quite costly and can perhaps be too complicated for some customers if not implemented correctly.