I hope I don’t get too much crap for this…
Relevant Fast Facts:
- Through September of 2019 there have been 5,000+ data breaches resulting in 8+ billion personal records being stolen.
- Experian, a global leader in consumer and business credit reporting and marketing, suggests that social security numbers can be bought for just $1, and driver’s license information for just $20 on the dark web.
- New account openings using stolen information accounted for an estimated $3.6 billion in losses in 2018. This does not include the 300 hours it will take the average victim to clear their name and credit report, or the loss to the retailer as 69% of consumers blame the retailer and change their shopping habits.
Why does it matter if someone has your personal record?
- Think about most times you make a significant purchase at a retailer. They typically ask you if you would like to open a private label or store-branded charge account. The criminals know this and accept the offer to open an account. All they need is the social security number, income, and a driver’s license, all of which they bought online (for about $21). In seconds, they have made an expensive purchase in your name.
- The second way that criminals steal using your identity is by shopping where you already have an existing private label credit card account and they engage in a card-not-present transaction. From personal experience, all the retailer will ask from me in a “card-not-present” scenario is my license and the last 4 of my social security number. They treat the fraudsters the same, and again, the onus is on the victim to clear their name. The loss estimated as a result of these fraudulent transactions for card-not-present are expected to amount to about $130 billion between now and 2023.
- The third main area where Intellicheck helps retailers combat fraud is non-receipted returns. Studies suggest that this type of fraud costs retailers $9.7 billion a year. The National Retail Foundation reports that each incident costs a retailer $1,700 on average. The perpetrators here are generally organized crime rings returning stolen goods for gift cards that are easily and quickly monetized.
- But it’s not just the retailers, it’s the banks too. At the retail branch of a bank, criminals will pose as you to empty your account. For example, at the end of September, a man walked into an Ohio Fifth Third Bank branch posing as a Florida business owner whose company had an Ohio location. He withdrew $7,000 from that business account using a fraudulent license.
How does Intellicheck fix the problem?
- Up until now KBA (Knowledge Based Authentication) has been the norm, but with the countless data breaches that we have seen over the past few years, it is too easy for anyone to get ahold of your personal information, thus making KBA obsolete. (32 state AG’s have wrote against it to the FTC)
- Intellicheck (IDN) is a business that provides instant, accurate identification authentication solutions.
- Intellicheck’s ID verification scanner has proven to be able to distinguish between fake and real IDs with 99.9% accuracy.
What’s so great about Intellicheck?
- NO NEW HARDWARE REQUIRED - Intellicheck typically works through existing point of sale platform, a mobile device, or online.
- FRICTIONLESS - Intellicheck can authenticate someone’s identity in under 3 seconds with greater than 99.9% accuracy.
- EASY TO USE - just scan the barcode of the ID with the Intellicheck app
- In the case of card applications, Intellicheck will harvest the information on the license to pre-populates the application, which results in less work for the customer and fewer data entry errors. So, Intellicheck can actually reduce some friction from the card application process while also reducing fraudulent applications by 99.9%.
- PER SCAN PRICING MODEL - Intellicheck has recently transitioned to a per-scan pricing model. This further incentivizes retailers and banks to try the product as there are little to no fixed costs. You only pay for if you use it! (however, this does subject revenue streams to seasonality)
MANY USES FOR THE TECHNOLOGY: Law enforcement (65 agencies currently use AgeID), liquor licensees, vaping vendors, banks, retail, auto loans, and so on.
The Maine Bureau of Alcoholic Beverages even sponsored Intellicheck’s “AgeID” technology, making it free to liquor licensees in Maine for a year.
“By giving retailers Age ID, we are providing them with a technology solution they can use to effectively prevent young people from purchasing alcoholic beverages and making a mistake that can have life-altering or life-ending consequences.” -BABLO Deputy Director Tim Poulin
Highlights from the most recent quarter:
- Revenue up 24% sequentially over Q2 2019 and 86% over Q3 2018 (1.04M to 1.93M)
- SaaS revenue in Q3 up 140% YoY ($650k to $1.56M) the new business model is working
- OPEX increased by only 8% YoY
- EBITDA increased by 56% YoY (-$1.1M to -$456k)
- 87% Gross Margins
- NO DEBT!
- Recently deployed into a consumer electronics chain with over 1,000 locations (analysts in the conference call Q&A were able to deduce that it is Best Buy). Best Buy plans to deploy Intellicheck’s technology solutions to their 700-plus branch locations by Q2 2020.
- Implementation team was been a huge success - 36+ integrations in 2019 compared to just 3 in 2018.
- In Q2 Intellicheck reported that they had 12 retailers in queue for 2020. On the Q3 conference call, the CEO said that number was now 20 or 21. He also noted that between Oct. 31 and Jan. 1 New retailer additions would likely slow down because most retailers refuse to alter their POS right before the holiday season.
- Analysts estimate the firm will reach profitability by the end of 2020
- CEO claims that all present clients have been glad to enthusiastically endorse Intellicheck to their peers. Combating fraud is a common goal of all retailers, so they are more than happy to share effective solutions among one another.
- They provided case studies for some of their banking clients and shared the following results:
Bank #1 - 75% sequential revenue growth over Q2
Bank #3 - 136% sequential revenue growth driven by call centers for their own branded credit cards
The consumer authentication space is new with no clear leaders. However, Intellicheck appears to be well-positioned to take the lead.
This is a company that offers a product with little to no upfront costs that will save a business money, protect its customers and brand image, and will benefit greatly from the inevitable elimination of the outdated methods of knowledge based authentication (KBA).
Side note: the name and branding couldn’t be better