Age Verification in the Era of On-Demand Delivery

The ability to immediately receive alcohol, tobacco and, to a lesser degree, marijuana products at your home, is a niche but growing segment of the delivery industry. Yet, the ease of ordering belies a morass of complicated state regulations when it comes to who can use and purchase products that can carry conflicting age limits. For example, an 18-year-old in Illinois can get medical marijuana delivered, but across the border in Kentucky, the product is completely illegal. How does a delivery service working in both states manage to stay compliant but still competitive? Technology is stepping up to solve the problem.

Age-Old Industry, Modern-Day Challenges

In a crowded field of competition, companies need to be quick, convenient, and compliant with strict state laws to keep products out of the hands of those who shouldn’t be accessing them.  

Greater liabilities and more oversight have heightened the importance of proper compliance. Delivery drivers must be able to capably and accurately confirm that the intended recipients not only receive their items but that they are legally allowed to do so in the case of age-gated products.

Advanced solutions like facial recognition and biometrics can offer a secure, seamless, and definitive process. In a recent study by the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST), identity verification firms were tested on their accuracy, demographic fairness, and robustness with varying real-world image quality. Incode was recognized as the top global solution in all three categories. 

From Risk to Reward: The Business Case for Age Verification

The costs of non-compliance with age verification requirements can be significant, not just in fines and punishments, but legal battles, lost revenue, and negative publicity. Businesses need to understand the specific laws in their operating areas in order to avoid costly problems (check out Incode’s blog on the evolving regulatory landscape in the US):

• Alcohol: Since 1984, the federal minimum legal drinking age in the U.S. has been 21, which also means the age of purchase is 21. Laws vary by state but can include administrative and criminal punishments. In Montana, for example, a first offense will cost a seller $500 with a second offense rising to $1,000. In Massachusetts, selling alcohol to a minor is a misdemeanor with a $2,000 fine or jail time.
• Tobacco: The federal minimum age of use and purchase of tobacco and related products like vapes in the U.S. is 21 as of December 2019. However, states set their own laws on enforcement. On the low end, in Louisiana, selling tobacco to anyone under 21 carries a minimum $50 fine for a first offense. In California, a first offense is between $400 and $600 and can skyrocket to $6,000 for a 5th or greater offense in a 5-year period. And in North Carolina, violators are guilty of a Class 2 misdemeanor and a fine of up to $1,000 and/or 30 days of community service. Failure to request proof of age from an underage buyer is also a Class 2 misdemeanor.
• Cannabis: The laws related to cannabis products are layered and changing quickly. While it is a controlled substance at the federal level, it is in the process of being moved from a Schedule 1 to a Schedule III drug, which would effectively allow its use for medical purposes. In 37 states and Washington, D.C., it is legal for medical use only by individuals age 18 or over with a physician’s approval. The 24 states where recreational use is legal, the age of use and purchase is 21. The laws around CBD products are even more nuanced and depend on whether it is sourced from hemp or marijuana; 9 states as well as the District of Columbia fully legalize CBD.

Devil in the Detail of Delivery Laws

• Alcohol: Delivery of alcohol is permitted within almost all states and D.C. except Utah. Mississippi and Alabama both amended their longtime prohibitions in 2021. However, several states, most notably Kentucky and Arkansas, still have dry counties governing delivery. Likewise, several states have blue laws limiting when alcohol can be sold. Interstate delivery and shipments are also restricted in certain states. 
• Tobacco: There appear to be no laws restricting the delivery of tobacco products. 
• Cannabis: At least 16 states allow medical and/or recreational marijuana products to be delivered in at least some cities if not the entire state. 

Technology Pays for Itself

Efficient age verification isn’t only about compliance; it’s about a seamless customer journey. Delays and frustration can drive customers away.

Not Just Compliant, But Competitive

Age verification is a strategic advantage for a business. Every second counts when it comes to a delivery. And those seconds can add up quickly across your organization. The faster that IDV can be completed, the greater the impact both to your business and to your customers.

In a competitive market where there are many options for delivery apps, an unhappy customer experience could drive them to choose another delivery service for all of their future orders, regardless of the price advantage. Similarly, in this gig economy, delivery delays and technology issues can build up driver frustration, resulting in employee attrition. Good end-user experience plus operator satisfaction will lead to greater market share.

Data privacy also shouldn’t be minimized. The information that customers provide must be kept secure. Good IDV can keep data, companies and users safe.

Building Trust, One Delivery at a Time

Companies fuel communities. And when companies comply with legal requirements, they foster a greater good that benefits everyone. Fewer legal issues means reduced liabilities and an overall smoother road ahead for commerce.

Preventing underage access to alcohol, tobacco and cannabis promotes responsible consumption and results in a positive impact on the broader community. A good app has protections in place to thwart even the most tenacious teenager from obtaining products only appropriate for their parents.

Likewise, delivery services keep roads safer from those who shouldn’t be behind the wheel. And they also follow the same laws as bars and liquor stores around providing products to customers who are visibly overserved, further ensuring that public safety is a priority. 

Leading the Way

Digital delivery companies can benefit from upgrading and streamlining their verification processes and taking advantage of advanced technology to improve their regulatory compliance. Incode was ranked #1 in Age Estimation technology. Using this technology, delivery companies and businesses in most states can ensure a user is of legal age with hyper-accuracy. This is a cost effective solution, only requiring document verification for a small subset of customers – saving businesses millions, while guaranteeing that verification of a customer has taken place per most state laws for age-gated deliveries.

For example, with a two-step verification, purchasers upload their ID to place an order and then the delivery person scans the ID of the recipient at the door before handing off the delivery. This eliminates contactless deliveries but guarantees that verification and direct interaction with a customer has taken place per most state laws for age-gated deliveries.

How it Works

There are three leading methods of age verification that are considered user-friendly. Separately, each can be sufficient, depending on the use case. Combined, they can offer the highest assurance that a company has covered all the bases.

• Data Verification” should read “Non-document verification through databases: Compare user inputted data to existing databases, such as a phone number
• Facial age Estimation: Utilize Artificial Intelligence (AI) to review a user-submitted photo or video, such as a live selfie for known age signals  
• Document-based Verification: Let AI compare a user-provided ID document to a live selfie to assess whether it is a match

Selecting an Age Verification Partner: Key Considerations

If your delivery program is looking to reduce friction for new users and improve compliance with an ever-growing litany of laws around age assurance, Incode is the choice for customer-centric companies looking to:

• Streamline Sales: Incode automates age verification for smoother checkout experiences, thus reducing cart abandonment and increasing conversions in the niche market that is age-restricted products
• Mitigate Legal Risks: Incode ensures compliance with complex and varying age restriction laws across different regions, thereby helping you avoid fines, enforcement, and unwanted headlines
• Build Customer Trust: Incode promote responsible retailing practices by proactively preventing underage purchases of specialty products
• Gain Data-Driven Insights: Incode helps you better understand your customer demographics and their preferences for age-restricted products to help you and your suppliers to build targeted marketing campaigns

Incode offers an end-to-end identity verification and authentication platform that helps our clients effortlessly distinguish good users from fraudulent ones. We ensure customers’ security and regulatory goals are met, so you can focus on growth objectives.

Incode’s fully automated, AI-first platform is built for low friction of genuine users, coupled with instant verification and re-engagement tools that drive conversions. Our multi-layer identity platform combines proprietary AI technology, deterministic identity checks, and advanced deepfake detection to combat even the most sophisticated fraud.

Learn more by contacting an Incode identity expert or booking a demo.