Digital Identity Bill Passes Key Senate MilestoneJeremy Grant Explains How Bill Would Create Standards, Funding for Online IDs
Through identity theft and impersonation, cybercriminals are stealing tens of billions of dollars a year from consumers, financial firms and government agencies.
Identity-related fraud has grown by 333% since 2017. Last year alone, the Department of Treasury's Financial Crimes Enforcement Network found that a vast majority of more than 3 million suspicious activity reports from banks were the result of a breakdown in the identity verification process.
In response to these trends, a Senate committee last week approved the Improving Digital Identity Act of 2022, a bill that would create governmentwide standards for identity verification and provide grants to help states and local agencies upgrade ID systems and offer online digital identity services.
Jeremy Grant, managing director of technology business strategy at Venable and coordinator of the Better Identity Coalition, says that birth certificates, driver's licenses, passports and Social Security numbers are used to verify identities every day, but governments "haven't addressed the gap between these legacy physical transactions, where those credentials work relatively well, and the digital space, which is where more and more business is going these days."
Grant, also an Information Security Media Group contributor, says the Senate Homeland Security and Governmental Affairs Committee vote on Tuesday puts the nation one step closer to protecting online identities.
No National IDs
The legislation stops short of mandating national IDs. It would create a task force to create standards and recommend a voluntary program for states, local, tribal and territorial governments to verify identities online for "high-value transactions."
About a half-dozen states have already rolled out mobile drivers licenses in the pilot phase. Nationwide standards would help ensure these new IDs are secure and provide a guide for others states.
Grant says online verification could be offered in a variety of forms, such as on-demand validation services, which could become part of the credit card application process, or a mobile app on smartphones that people could carry in their pockets.
"Identity is very personal," Grant says. "You're probably going to need to create a few different channels for Americans to be able to tap into these authoritative sources. I'd be thrilled to have a mobile driver's license app on my phone. Others would say, 'I don't want to have an app from the government on my phone.'"
To avoid any potential federal conflicts with state authority, the bill calls for a task force of federal, state, local and private-sector members to study and recommend standards for interoperable systems between the various agencies.
Members would include top representatives from the departments of Treasury and State, the National Institute of Standards and Technology, Financial Crimes Enforcement Network, Social Security Administration, General Services Administration and Office of Management and Budget. The task force also would include state and local officials with experience in identity technology and systems for managing credentials, as well as private-sector experts in privacy and civil liberties, identity verification, cybersecurity and businesses that rely on identity verification services.
"You don't necessarily want to be legislating specific technologies or specific approaches," Grant says. "There's a nice balance there between describing the outcomes that you're looking for and setting up a process to get there, but not necessarily prescribing the specific solutions to get those outcomes. There's a lot of this really left up to the experts group."
Support for Federal Programs, Local Grants
In addition to the financial services industry, the federal government itself would be a beneficiary of the law, Grant says. During the pandemic, the Federal Trade Commission recorded nearly a 3,000% increase in complaints about government benefits fraud - often linked to poor identity verification.
"We've seen this in the past where agencies have put something online and criminals basically swoop right in and use it to steal money and steal data," Grant says, who previously led the National Program Office for the National Strategy for Trusted Identities in Cyberspace. "So I think if there were better solutions that were out there, it would certainly help digital government at all levels and in the private sector."
The bill calls for the creation of a digital identity innovation grant program within a year of adoption. The federal government would award grants to state, local, tribal and territorial governments to "upgrade systems that provide identity credentials to support the development of highly secure, interoperable" verification systems. The grants would support technology for capabilities including digital identity, cybersecurity, privacy, equity or accessibility.
Racing Against the Clock
While the bill gains bipartisan support in committee, Grant says it faces challenges in winning full approval by the Senate and House by the end of the 2022 legislative session. Congress is about to recess prior to the midterm elections and will have to prioritize the bill among many others during the lame duck session in November.
"I'd say for this and any other bill that people want to approve, the biggest enemy right now is time," Grant says.