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Absent Federal IDs, Digital Driver’s Licenses a Good Start

The ability to verify online that someone is who they say they are is critical for an increasingly digital world. While a federal solution would be ideal, state-issued digital licenses are a move in the right direction.

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One of the biggest challenges for online services in both the public and private sectors is verifying the identity of users. When individuals register for a new service, how can online providers know if they are who they say they are?

While some online services may not need identity information — an online store, for example — others require it, such as financial service providers that are obligated to verify the identity of individuals seeking to open accounts. Moreover, identity information is often necessary for many online government services, such as obtaining unemployment benefits or a marriage license, or recording a real-estate transaction. In many cases, individuals cannot complete these transactions online because there is no secure and reliable way for them to prove their identity online.

When online services that require identity information are available, they usually rely on complicated and error-prone processes to remotely verify a user’s identity. For example, one of the most common techniques is knowledge-based authentication, where online services ask individuals to prove their identity by answering questions about data from credit agencies, such as giving the street name of a previous residence. But of course, not everyone will correctly remember this information — creating the potential for false negatives, where legitimate users cannot access services — and some of this information may be known by others, or even publicly available, creating a different potential for false positives, where unauthorized users can impersonate others.

Another method is to have services attempt to remotely verify physical identity documents, such as a passport or driver’s license, using a combination of automated facial recognition and manual verification. Unfortunately, these processes are also error prone, and many of the techniques to determine whether an ID card is valid, such as tactile features, overlays or laser engraving, are not effective using only photos or video.

Indeed, poor identity verification is one of the reasons that identity theft is such a growing problem as more services move online. The Federal Trade Commission received 1.4 million reports of identity theft last year, double the number in 2019, with one security research firm estimating $56 billion in losses.

The best solution to this problem would be for the federal government to develop an interoperable framework for securely issuing and validating electronic IDs and then direct a federal agency to start issuing these electronic IDs upon request. Both the State Department and the Department of Homeland Security already have systems and processes in place that could easily be adapted to issue e-IDs, either as standalone products, such as smartcards or software certificates for mobile phones, or as an extension of existing identification documents, such as passports.

But in the absence of federal action, a number of states have already begun this work on their own by creating digital driver’s licenses that provide a secure digital alternative to a physical identity document. These are more than just a photo of a driver’s license on a phone — they are mobile apps with a number of identity features, such as allowing individuals to only share some information, such as their age and not their address, when purchasing alcohol, thereby increasing privacy. (For more on where states are with mobile driver’s licenses, see Mobile Driver's Licenses Pave the Way for Digital IDs.)

However, these various state electronic IDs are not always compatible, which means they cannot necessarily be used out of state, nor do they all necessarily work efficiently for remote transactions. The Improving Digital Identity Act, introduced last year by Rep. Bill Foster, D-Ill., would not only create a national, interoperable electronic ID framework across all levels of government, but it would also establish grants for states to upgrade their systems for issuing driver’s licenses and other identity credentials to support electronic IDs.

Both the states and the federal government have long dragged their feet in improving identification in America — the Real ID Act, passed in 2005, is still at least two years away from full implementation. Given the many benefits of electronic IDs, hopefully it will not take another two decades to see progress.
Daniel Castro is the vice president of the Information Technology and Innovation Foundation (ITIF) and director of the Center for Data Innovation. Before joining ITIF, he worked at the Government Accountability Office where he audited IT security and management controls.