By Catherine Shu From techcrunch

In 2012, about 7 percent of all people aged 16 or older in the U.S. experienced identity theft, with their financial losses totaling $24.7 billion. Christopher Morton is familiar with the crime because in 2007, he had his identity stolen. Fortunately, the thieves were prevented from obtaining new credit cards, but Morton became interested in how identity verification systems work.

With co-founders John Backus and Alain Meier, Morton created BlockScore, an identity-verification startup and member of Y Combinator’s latest batch that is launching today with $2 million in funding from Battery Ventures, Khosla Ventures, Lightspeed Venture Partners, New Atlantic Ventures, Boost VC, Y Combinator, and several angels.

“John, Alain, and I worked on systems that required ID verification and knew how bad the vendors were,” Morton told me in an email.

“I built a payments system for the company I founded, Cube [a member of Y Combinator’s winter 2012 batch] that required ID verification for compliance and anti-fraud. Alain and John were looking into the remittance space. The same antiquated systems and business processes still existed when we looked for ID verification solutions last year.”

BlockScore was created as the solution to that problem and its target verticals are payments, prepaid cards, banking, marketplaces, Bitcoin exchanges, and sharing economies. Morton explains that BlockScore helps companies in those sectors by “reducing their compliance burdens for Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations,” which are designed to help protect consumers and businesses from identity theft and other forms of fraud.

When a consumer signs up with a company that uses BlockScore, they will be asked for their name, address, date of birth, and passport number or the last four digits of their social security number. That info is then passed to BlockScore API and verified to make sure that it is real and that the person is not on any criminal watch lists. Then BlockScore asks the consumer questions to verify their identity, such as “which of these people do you know?” or “which make of car did you own in 1999?”

Larger companies often request photo IDs, utility bills, bank statements, or leases to verify identity or rely on credit reporting agencies to verify identity.

“If you have large volumes, tens of thousands of dollars, and three months to go live, they were the only game in town. If you didn’t meet those criteria, they likely would not return your calls unless you were very persistent. They sell a bunch of point products,” Morton says.

On the other hand, BlockScore aims to be more accessible by not charging upfront fees, making its documentation publicly available, having modern APIs, and a simple pricing plan. Morton says companies can sign up for the service and implement BlockScore in one day.

“Often times, either because of regulatory compliance or acute fraud, our customers do not have three months to implement a legacy vendor so that isn’t even an option for them. While many vendors have modernized payments, we are modernizing ID verification,” he explains.

For more on this story go to: http://techcrunch.com/2014/06/26/blockscore-lands-2m-in-funding-for-making-i-d-verification-easier/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29