If you have been paying attention to the digital transformation feed, you might have noticed the automotive industry has been digitized with increasing reliance on online sales, remote vehicle rentals, and connected cars and services. However, this also raises the concern of fraud and ensuring the authenticity of customer identities. So, ID verification in automotive industry has become an important component for smooth business operations and the security of assets. 

The global identity verification market is projected to grow from USD 11.4 billion in 2023 to USD 44.6 billion by 2032. This growth is led by regulatory requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML), and General Data Protection Regulation (GDPR), which mandate robust identity verification processes across industries, including automotive.  

With the rise of connected vehicles and the increasing use of digital platforms for vehicle sales and services, the need for secure and efficient ID verification systems has become very important. 

Check: 14 Real-World Verifiable Credentials Use Cases & Applications 

The Need for Digital Identity Verification in the Automotive Industry 

As stated above, the automotive industry faces various challenges when it comes to identity verification. For instance, traditional methods of verifying customer identities—such as manual document checks—are no longer sufficient in an era where online transactions and remote services dominate. The rise of ride-sharing platforms, online vehicle sales, and subscription-based car services has made it important for businesses to incorporate advanced digital identity verification solutions. 

One shocking example of the risks involved is the case of a woman who used a fake ID and modified her driver’s license to scam a dealership into letting her acquire a new car worth over $42,000. This incident clearly shows the vulnerabilities that dealerships face when relying on old, outdated verification methods. With digital ID verification systems, businesses can drastically reduce the incidence of identity fraud – reducing up to 90% in the cost of customer onboarding and fraud. 

According to Regula Forensics’ survey, 43% of organizations cite preventing identity fraud as their top priority for implementing ID verification solutions. Moreover, decentralized identity and verifiable credentials (VCs) are modern solutions to address these challenges. Decentralized identity allows users to control their personal information where centralized authorities have no control over it, while verifiable credentials provide tamper-proof digital versions of physical documents like driver’s licenses and vehicle registration papers. EveryCRED offers these solutions for ID verification in automotive industry and enables faster, more secure transactions while maintaining user privacy. 

Must Read: Use Cases of Verifiable Credentials in Manufacturing Industry for Supply Chain Traceability 

The Role and Responsibility of ID Verification in the Automotive Industry 

ID verification plays a very important role in the security and efficiency of automotive transactions. Below are major key responsibilities: 

A) Fraud Prevention 

As stated earlier, fraudulent activities such as fake IDs or stolen identities cause financial losses for dealerships and rental companies. A solid ID verification system can be a line of defense against identity fraud. With this, the industry can significantly reduce the incidence of fraudulent activities. 

B) Customer Trust 

Incorporating reliable ID verification systems shows a commitment to customer security and increases trust in the industry. When businesses safeguard customer identities and prevent unauthorized access to services, they earn customer confidence and loyalty. 

C) Compliance 

The automotive industry is subject to various regulatory requirements. For example, the Red Flags Rule in the USA mandates businesses to have a solid system in place to detect and act on warning signs of identity theft. Plus, many countries have strict rules and policies regarding customer identification. Compliance with KYC, AML, and GDPR standards is essential for avoiding legal penalties and maintaining customer trust. 

D) Operational Efficiency 

Digital ID verification measures like decentralized identity or verifiable credentials smoothen the customer onboarding process and eventually reduce the time and resources required for manual document checks. Such solutions can handle high volumes of verification requests efficiently and improve operational workflow. 

Read This Blog for More Details: How Secure Is Automotive Digital Identity and the Role of Decentralized Identity & Verifiable Credentials in It 

How Decentralized Identity and Verifiable Credentials Can Be Used for ID Verification 

Decentralized identity and verifiable credentials offer innovative solutions to many of the challenges faced by traditional identity systems in the automotive industry. These technologies provide secure ways to manage digital identities and give users control over their personal data. 

Here are use cases where decentralized identity and VCs can be applied: 

1) Secure Digital Car Keys 

VCs and decentralized identity can be used in smart car identity management to issue and manage digital car keys securely. By connecting the keys to a user’s decentralized identifier (DID), access can be granted or revoked based on authenticated identity attributes. This is better for security and convenience. 

2) Rental Services 

Car rental companies and service providers can use decentralized identity systems to verify customer identities instantly and securely before handing them access to vehicles. 

3) Vehicle-to-Vehicle (V2V) Communication 

In the context of connected vehicles, VCs offer secure communication between cars. By authenticating the identities of vehicles and their associated data, V2V interactions can be protected against tampering and unauthorized access. 

4) Authorized Access to Vehicles 

Now, when vehicles are becoming more connected through IoT devices, decentralized identity can ensure that only authorized persons can access features like remote diagnostics or personalized settings. 

5) Supply Chain Transparency and Management 

VCs can be used to track parts across the supply chain securely and to authenticate the identities of suppliers and components throughout the automotive supply chain. This ensures supply chain transparency and only verified components are used in production. 

6) Insurance Claims 

The use of VCs as ID verification in automotive industry simplifies insurance claims by enabling customers to share verified information about their vehicle’s history or ownership status directly with insurers. 

7) Vehicle Ownership Transfer 

When selling or buying a vehicle online, VCs can be used to securely transfer ownership documents between parties without needing physical paperwork. The decentralized identity of the previous owner is revoked from the decentralized identifier and a new one is issued to the new owner.  

EveryCRED for ID Verification in Automotive Industry 

EveryCRED offers decentralized identity and verifiable credentials solutions tailored to various industries, including automotive. Our solutions in the automotive industry simplify credentials verification processes through verifiable credentials tied to decentralized identities. 

We offer APIs that can be easily integrated into your existing software system. We also develop a custom software solution for automotive businesses that can be used for ID verification with decentralized identity and verifiable credentials. 

To learn more about how EveryCRED can be used for ID verification in automotive businesses, contact us at admin@everycred.com and our experts will explain it in detail. 

The Bottomline 

Thus, ID verification in the automotive industry is not just about preventing fraud but much more than that. It is important for better customer privacy and trust, regulatory compliance, and protecting sensitive data. Decentralized identity and verifiable credentials can be used as robust ID verification solutions in the industry.  

EveryCRED offers dedicated custom VCs and decentralized identity solutions for various industries and by partnering with us, you can ensure that you are well-equipped to handle the challenges of modern digital transactions while offering customers a better and more secure experience.