As businesses consider partnering with us, they sometimes ask why we require customers to provide the last four digits of their Social Security numbers (SSN).

It’s a good question, as we should all take care in sharing personal information. The digits are one of five pieces of information we request from shoppers who apply to buy with Affirm. Together these details initiate a unique underwriting process that helps us approve more customers, so they can pay how they want when buying from your business.

It also prevents us from letting fraud getting in the way of building a pay-over-time solution that works financially for everyone.

How we help mitigate fraud losses

The issue is critical: Retailers could lose up to $130 billion due to fraudulent transactions between now and 2023, according to a study from Juniper Research. Another report suggests merchants pay $2.94 in total costs for every dollar lost to fraud. 

To help your business combat this problem, we assume fraud liability on purchases made with Affirm. The customer SSN detail helps us deliver on that promise.

As shoppers apply to buy with Affirm, we seek to approve those who won’t abandon their commitment to pay over time. The last four digits of their SSN enable us to do a quick credit check to both confirm the identity of the applicant and determine creditworthiness. This step has no impact on an applicant’s credit score.

Checking identity helps us approve more customers

Sandeep Bhandari, our Chief Strategy and Risk Officer, recently explained that this identity verification has two components. “The first part is about making sure that the identity exists and that this is a real person. The second part is about ensuring that the applicant’s identity actually matches the identity on the application, and that they are in fact who they say they are.”

The verifications aid our machine learning-based underwriting, which approves 34% more customers than our competitors, on average. And these approvals can help lower your customer acquisition cost.

The partial SSN detail also helps prove identity as part of our Customer Identification Program (CIP). A CIP is required for working with our banking partners and is part of compliance with the anti-money laundering (AML) law passed by Congress in 1970.

Sharing the last four SSN digits is a small step for shoppers who want to buy with Affirm, and it’s a big leap in helping you enjoy higher approval rates while saving on fraud losses. It’s also a one-time action that approved customers won’t need to repeat as they make more purchases with Affirm.

Visit our site to learn more about how we take on fraud risk when your customers are approved to pay over time with Affirm.