Electronic Age Verification in Direct Shipping

Point. Click. Drink. This is what the wholesale lobby points to when opposing wine shipping legislation. Preventing the sale of alcohol to minors has played such a pivotal role in the consumer direct evolution that it was famously referenced during the Granholm v Heald arguments in front of the Supreme Court. When marketing wine in the lucrative and growing consumer direct channel, there are several issues to consider when deciding how to address age verification requirements.

Because electronic commerce (eCommerce) transactions do not have the benefits of proof of age that in-person transactions have, a number of digital techniques are commonly used in the eCommerce process.

Digital Verification Techniques

Collecting purchaser’s date of birth (DOB) - DOB collection can be done when the user first visits your website, or during the checkout process on your eCommerce site. Many states require DOB for their state reporting, so collecting DOB is a very common, and highly recommended practice. Furthermore, if the purchaser is shipping the wine as a gift, the DOB of the recipient should be collected as well.

Age affirmation - “I affirm that I am over 21 years of age and eligible to purchase alcohol”. Affirmation statements such as this are found on many websites that sell wine and can be a good deterrent. But, affirmation alone does not meet the requirements of the three states that currently require formal age verification.

Electronic age verification - This method uses a third party to confirm the individual’s age by cross-referencing their information against a database of age-related information. More on how this approach works later.

States are Requiring Age Verification on Every Customer

On top of the requirements that common carriers (FedEx and UPS) verify the age of the recipient upon delivery, many states also require that you sell wine only to persons over the age of 21. In 2006, Michigan became the first state to require age verification on the purchaser of the wine. One of two methods can be used in Michigan: Collection of a copy of the purchaser’s drivers license, or use of an approved third party age verification system. Michigan has approved several companies that provide an age verification service. Two of the most popular are ChoicePoint and IDology. Through industry associations, the cost of these services usually amounts to about $.50 per transaction. These companies maintain massive databases on consumers throughout the United States, which they use to determine with certainty whether or not that consumer is over a certain age. The data that the provider can utilize differs from state to state, therefore the “match rate”, or rate at which you get a confirmed answer from the age provider, can vary widely. Our latest analysis showed an 81% hit rate on average when sending age verification requests to a third party.

Michigan allows you to elect to store a copy of the customer’s driver’s license on file in lieu of using an approved third party age verification service. This option carries several risks however. Keeping a copy of a customer’s ID can be logistically cumbersome and requires several additional steps on the part of the customer in order to complete a sale. In addition, drivers license IDs in many states contain sensitive personal information. This information can represent a large liability to your business if you do not secure this information appropriately and are not aware of the data privacy risks involved with storing such information. Michigan can potentially audit your records two years after the purchase took place, so the copies of government identification should be stored securely for up to three years to be sure.

Since 2006, Georgia and Ohio have joined Michigan in requiring age verification of the wine purchaser. The exact statute language is shown below.

Michigan:“Verify the age of the individual placing the order by obtaining from him or her a copy of a photo identification issued by this state, another state, or the federal government or by utilizing an identification verification service.”

Georgia: “Before accepting an order from a consumer in this state, the holder of a special order shipping license shall require that the person placing the order state affirmatively that he or she is of the age required by Code Section 3-3-23 and shall verify the age of such person placing the order either by the physical examination of an approved government issued form of identification or by utilizing an Internet based age and identification service.”

Ohio: “Prior to sending a shipment of wine to a personal consumer, the holder of an S permit, or an employee of the permit holder, shall make a bona fide effort to ensure that the personal consumer is at least twenty-one years of age.”

Improving Match Rate on Electronic Age Verification Systems

When using an online age verification service, the required fields to pass in are first name, last name, and address. Passing in date of birth and/or the last four digits of the social security number can lead to a stronger match rate. To maximize your chances of getting a match, you should use the name and address from a government-issued ID such as a driver’s license or passport, and avoid using business addresses or addresses with post office (PO) boxes. Also, strip any prefixes (Mr., Mrs. Dr.) and suffixes (Sr., Jr., Esquire) from the names when possible. Once an individual has been validated successfully by an electronic service, you do not have to validate that individual again as long as you hold on to the unique identifier that is returned from the provider. This “transaction ID” is important, and should be retained in your records.

Performing Age Verifications is Good for the Industry

Embedding age validation and verification into your consumer direct business benefits not only you, but also the industry in general. Opponents of direct shipping use the sale of alcohol to minors is the go-to reason for thwarting direct to consumer legislation or inserting discriminatory requirements such as a face to face transaction requirement. For example, a ban on the face to face requirement in Indiana was recently reversed in the 7th Circuit. By following best practices in ensuring that your business does not sell wine to minors, you are supporting the efforts of organizations such as Wine Institute, Wine America, Family Winemakers of California and Free The Grapes! that depend on “good actors” to uphold the standards they have defended in court on your behalf. For this reason, Free The Grapes! recommends that “Licensees must verify the purchaser’s age at the point of online purchase before completing any transaction” as part of its Wine Industry Code for Direct Shipping.

Age Verification Will Continue to Grow

ShipCompliant optionally embeds age verification in compliance checks and is beginning to see more and more of its customers adopting age verification checks for all orders, not just those being shipped to MI, OH, or GA. This is especially true of online wine retailers, which frequently find themselves on the receiving end of unwanted scrutiny from state agencies and even rival companies. In the medium term, we can look forward to improved age check match rates as the providers get better and better at returning relevant results. We will also most likely see additional states begin to require electronic age verification in their statutes.

–

Jason Eckenroth - President, ShipCompliant



Jason Eckenroth is the president and founder of ShipCompliant, a provider of software based compliance and reporting services for the wine industry. ShipCompliant tracks thousands of regulations throughout the US governing the sale and shipment of alcohol and provides this service on demand to more than 100 technology and logistics providers in the industry. ShipCompliant currently serves more than 850 wine brands operating in 29 states.

This entry was posted by admin on Thursday, September 18th, 2008 at 6:42 pm and is filed under Direct Sales, The Industry. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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