With the recent hacking at retail stores like Target, Neiman Marcus, Michaels and others, the issue of identity theft is on everyone's mind. It's a scary proposition, having someone rack up a bunch of purchases in your name and ruin your credit rating.
So this is a good time for intelligent identity verification service BlockScore to come along. The company, which makes identity-verification and anti-fraud technology that is used by online businesses, has now raised $2 million in seed financing, it was announced on Thursday. The funding came from a group that included Battery Ventures, Khosla Ventures, Lightspeed Venture Partners, New Atlantic Ventures, Boost VC, Y Combinator and several angels.
Founded in 2013, BlockScore provides API-level access to verify users’ identity information across several public and private databases and criminal watch lists.
The company's clients are can include financial institutions, who need it for regulatory purposes, as well as companies in the sharing economy, who need it for tax purposes and anti money laundering efforts, Chris Morton, president and co-founder of BlockScore, explained to me in an interview. General e-commerce companies who need to help combat fraud are also clients.
BlockScore is good for pretty much any company that ships out goods and services, and then awaits payment, he said. They could be shipping to a fraudulent address, or to a stolen credit card, and the merchant has already fulfilled their end of the bargain.
He called it a "horizon of time issue." And BlockScore allows businesses to immediately have access to a database of information to verify the customer's identity.
Here's how BlockScore works:
When a customer signs up for a service, they enter some basic information about himself to verify their identity. Once that happens, the customer is given a set of questions, which also known as Knowledge Based Authentication or out-of-wallet questions.
These are not questions that the customer themselves will choose and then answer, Morton explained to me. Rather, they are picked out of marketing files, and can be questions along the line of, "which car did you own in 1994?" or "Which address is associated with you?"
The point, Morton explained, is to make it that much harder for someone to pretend to be someone else. These questions would be next to impossible for anyone else to answer. Once the customer answers these questions correctly, they have been verified and can proceed on the website.
Here is what the dashboard looks like on the business end:
BlockScore sees its biggest competition in the form of credit reporting agencies, whose products take months to implement, and require large upfront fees and involve complex legal contracts. With BlockScore, companies can set up identity verification simply and cheaply.
Ultimately, the company's mission is to "provide a total view of someone’s identity," Morton said. "Right now, people have to prove their ID to one financial institution and then to another."
And then, if someone's identity is stolen, its very difficult to prove that you are the person you say you are.
What BlockScore wants to do is be able to immediately identify if someone's identity has been stolen, then notify its customers that are engaging with that customer so that they can save themselves from the consequences of that fraud. Those companies can also notify the person whose identity is stolen because "they're the ones that have the relationships with those customers."
BlockScore says that it intends to use the new funds for product development and sales expansion.
(Image source: blockscore.com)