After a House investigation, what’s next for ID.me? We asked its CEO

Now, the McLean, Virginia online identity verification company’s leadership is working to get the company back on track to its success story of 2021 — and trying to reverse the narrative that it’s the big bad wolf of the identity technology industry.

First, a primer

In late January of last year, the company was fielding concerns about the privacy of its identity tech software and a deal with the IRS. The deal required users to verify their identity with facial recognition software from ID.me if they wanted to access a digital transcript or view an online account from the tax collection agency. Critics were unhappy with the bias of facial recognition tech that prevented folks from receiving things like unemployment benefits. California State Sen. Anthony Portantino went so far as to say that the company had “put thousands of legitimate claims in limbo” with no way out.

All of this led to a larger issue with another federal government agency. In November, the House’s Subcommittee on the Coronavirus Crisis and the Committee on Oversight and Reform released findings from an investigation it launched into ID.me in April. In short, the report said that the company mischaracterized its wait times and overstated the $400 billion in false unemployment claims CEO Blake Hall estimated were taken during the height of the pandemic — all to make its product seem more valuable (at the time, ID.me had pointed the committee towards an estimate from the Heritage Foundation for $357 billion, which actually referred back to ID.me’s estimate).

In response, ID.me said that the $400 billion number was an estimate based on 45% fraud and improper payment rate. A report from the Office of the Inspector General (OIG) for the U.S. Department of Labor found a similar rate at 42.4%; while that estimate was much lower at “at least $163 billion,” the OIG stated that the number was “likely higher” without specifying a ceiling on that amount. ID.me also stated that the company was already working with 25 states when that estimate was made in 2021 and added two more states for the rest of the year — which, according to the company, meant it hadn’t incentivized too many more states to use its services.

Today, ID.me has 12 federal partners and contracts with 37 state agencies in 31 states, including DC. Last year, it had nine federal partners and contracts with 35 state agencies in 30 states. Even with the turmoil, the company still managed to grow, landing on the 2022 Inc. 5000 list at #860 with 737% growth. Hall said that to his knowledge, only two small contracts were directly impacted by the investigation. Following the controversy with the House, the IRS said it would “transition away from using a third-party service for facial recognition” in account authentication; just two weeks later, the agency announced it actually would allow taxpayers “the option to verify their identity automatically through the use of biometric verification through ID.me’s self-assistance tool,” as well as the ability to confirm “their identity during a live, virtual interview with agents.”

ID.me’s headquarters. (Courtesy photo)

But before that, when news of the House’s investigation first broke, Hall, said he was notified pretty much the same way everyone else was: a press release saying the letter had gone out. The Army veteran’s initial reaction? That the claims were not true, as well as surprise at the focus “on the American veteran company and not on the nation-state actors who are defrauding our system.”

“My individual feelings, obviously, were hurt and shock and disappointment,” Hall told Technica.ly. “My feelings as an American were more of indignation, and the reason why is that we have to learn from failure. Failure is a great teacher and, in fact, the one great quality of failure is that it helps you get better.”

He explained that the company did take some of the criticism to heart, offering a video chat option so that users don’t have to use facial recognition tech (ID.me also offers an in-person verification option). The team also set out to clarify information about ID.me, noting that it doesn’t sell data nor send biometric information to its government partners — save for very specific circumstances involving identity theft or fraud. For many, he said, it was lost that ID.me is an identity verification company, not a facial recognition company.

Hall said that his team held discussions about the House proceedings and everything that was going on, though he declined to offer many details. He added that internally, leadership reiterated the facts and let employees decide for themselves how they felt about the situation; according to Hall, the majority of employees decided to stay on with the company. However, he felt the situation offered an opportunity to show company values, which he said “galvanized” company culture.

“It sucked to have the reaction be one of inferring bad intent or bad faith, because we will say we’re sorry when we screw up and we’ll take accountability for it. Nobody intended for that to happen,” Hall asserted. “But part of being human and growth is that you’re going to screw up from time to time, and I think it’s how you respond to it and take accountability, and learn and grow, is what matters.”

The past’s lessons and future implications

In light of the past few years, Hall said he does wish the company was more proactive in spreading the word that it doesn’t sell data. He noted that ID.me should have presented more pathways that don’t involve facial recognition from the start.

In his view — and despite the myriad of research-informed concerns surrounding the risk of racist biases in facial recognition tech (which, as much as Hall emphatically states does not characterize ID.me, is a form of identity verification tech) — identity tech also opens more doors than it closes.

“Folks often conflated identity verification as being a barrier for folks, when in fact, it was identity verification that was stopping this massive amount of fraud — and in cases like in California, we actually allowed the agency to reopen when it shut down due to fraud,” Hall said.

Going forward, Hall said that ID.me is focused on what it can control with plans to continue growing. He said the company is coming up on 100 million users, and he still plans to take it public when the market is a little friendlier. But most of all, he’s staying focused on his core mission: making the last password you’ll ever need.

“I still want to advance a world where one day my kids came up to me and they say, ‘Daddy, did you really have to create a new login at every single website that you went to?’ [And I can say] ‘Yeah, but we fixed that,'” Hall said.