Tim Nitzsche-Ruggles' Testimony to the
Subcommittee on Domestic and International Monetary Policy
May 20, 1998

Introduction

Good morning Chairman Castle and members of the Committee. My name is Tim Nitzsche-Ruggles. I am the Senior Vice-President for Business Development and one of the original founders of Sagem Morpho, Incorporated of Tacoma, Washington. Morpho is a wholly owned subsidiary of Sagem S.A., a leading European high technology developer and manufacturer headquartered in Paris, France. Our name ¾ "Morpho"¾ is a derivative of the word "morphology," which means the study of the form and structure of living things.

I am here today to talk to you about a solution to one of the nation’s most serious problems, check fraud.

Annually, the FBI has estimated that check fraud costs American retailers and banks more than $10 billion, and that loss is growing rapidly. While many means for eliminating check fraud by increasing the security of checks themselves, little or nothing has been done about the problem of verifying the identity of persons presenting checks for payment. Morpho has a solution to this problem, and it has been proven over the years in literally hundreds of thousands of identification transactions. Our solution identifies the unique characteristics of fingerprints to positively verify a person’s claimed identity. This technology is broadly known as "biometrics," the measurement of a person’s immutable physical attributes.

Over the last 15 years my French and American colleagues and I have built Morpho into one of the largest and most successful biometric technology companies in the world. Our expertise is in a biometric technology known as Automated Fingerprint Identification Systems or "AFIS." Fingerprints and biometrics are our only business, and therefore we have a strong interest in all measures that will help ensure the responsible use of biometric technologies.

We have installed fingerprint identification systems and technology that support law enforcement, civil, and commercial customers around the world. At last count, our systems search a collective, worldwide total of nearly 60 million fingerprint records. At Morpho, we are proud of the fact that we helped develop the AFIS image processing and matching technology the FBI will use to search its database of more than 32 million criminal suspects.

Worldwide Trend Toward the Adoption of Biometric Identification

All over the world, Morpho and its parent company, Sagem, have observed an increasing interest in biometric as a means of positively identifying persons who need access to funds or benefits. We are confident that fingerprint technology like ours can help guarantee the integrity of almost any transaction ¾ whether it involves personal or financial information ¾ while at the same time ensuring that the privacy of the individual is fully protected. In fact, we believe that biometrics represent what is possibly the only feasible means of protecting a person's data and financial transactions from the threat of fraud while at the same time protecting the privacy, and even the anonymity, of the individual.

The primary strength of our technology is its proven ability to search quickly and accurately multi-million record databases to identify a suspect with close to 100% accuracy. Morpho’s fingerprint biometric technology is now fully mature and has demonstrated its efficiency and reliability in the context of extremely large-scale databases and search demands, factors which are the hallmarks of any commercial biometric applications.

Biometrics and the Right to Privacy

As our society becomes increasingly complex, the need to find a means to identify people in the context of everyday transactions has become more and more important. In the course of daily commerce, each of us exposes personal data about ourselves to complete strangers participating in the electronic transaction process whose intentions we cannot assess. Once this data has been exposed, we have little control over how it is used; the more sensitive the data is, the greater our risk. Who hasn’t heard, for example, of the horror stories concerning people who have lost their billfolds or purses, only to have criminals use this stolen identity to obtain thousands of dollars worth of goods, thereby ruining credit histories for a lifetime?

The right to privacy must begin, and be enforced at, the level of individual transactions. The most important safeguard that can be offered at this level is to give each citizen absolute control over when, where, and how his or her individuality is used. The key to such control is to ensure that no one, save the individual him or herself, is permitted to make these decisions. This is possible only if each claim to an identity is verified easily and quickly and that the result of this verification is accepted as accurate with a high degree of confidence.

The Evolution of Fingerprint Biometrics

Now, I would like to provide you with a brief background on fingerprints and AFIS technologies, describe how we have applied this technology in support of government and industry, and show you an example of how we have adapted this technology to help retail organizations combat the serious problem of check fraud.

The uniqueness of fingerprints

Fingerprints are the most studied and understood biometric available; in fact, fingerprints were being used as a form of positive identification during Greek and Roman times. Fingerprints are not only unique, they don't change over time, even when the fingerpad is damaged. Research into the application of computers to help law enforcement store and search the ever-increasing number of fingerprint records began in the 1970s when computers became powerful enough to analyze the image of a fingerprint, recognize the distinctive features that made it unique, and quickly search a database to find a matching record. Since then, 49 states and the FBI have acquired or have access to AFIS systems, as do many major metropolitan law enforcement agencies around the country.

Purposes: Enrollment (identification) and Authentication (verification)

Fingerprint identification can serve two distinct purposes: First, fingerprints can be used to determine that a person is unique. The accuracy of Morpho’s technology, for example, is so great that we can find a single record in a database that consists of tens of millions of similar records. With respect to civil AFIS applications, this capability avoids the possibility that a person can enroll in the same system under more than one name. Second, fingerprints can verify that a person is who they claim to be with high precision. This capability enables commercial clients to easily, and with great confidence, establish their identities at the point-of-transaction.

Civil Applications of fingerprint biometrics

Having proven the effectiveness of AFIS to address the identification needs of law enforcement, we have adapted our basic technology to support the needs of state agencies who seek to ensure that each claimant for government benefits is unique. Eleven states have already authorized their public assistance agencies to implement fingerprint identification systems and thereby prevent the payment of duplicate benefits. Morpho has installed such a statewide system in the State of New York and we are currently implementing similar systems for the States of Texas and Arizona and have been awarded a contract to install a system for the State of Florida. The State of New York estimates that our civil AFIS operation has generated more than $100 million in savings by identifying fraudulent claims during its first two years of operation. To protect the privacy rights of recipients, the State of New York adopted legislation that prohibits the use of finger image data for any application other than the prevention of multiple enrollments for home relief.

These civil AFIS systems have been very positively received by both the agencies themselves and by their clients. The reasons for this are simple: the elimination of fraud saves taxpayers money, which benefits everybody by ensuring that funds are used only for the truly deserving, and the assurance of accurate identification ensures benefits recipients that they are treated fairly by their government because it guarantees the legitimacy of their claim to receive benefits.

Commercial applications of fingerprint biometrics

In the context of a commercial transactions, fingerprint technology has several other important advantages. For one thing, the act of placing a finger on a piece of glass is voluntary, non-intrusive, and proves that the person was present when the transaction occurred. And, very important to ensuring that fingerprint biometrics are not misused, it is important to note that because the act of capturing the fingerprint image requires a deliberate and cooperative act that indicates his or her assent ¾ that is, touching the scanner’s sensor surface ¾ fingerprints can not be taken from someone without their explicit consent and cooperation.

The performance of a biometric system matters, too. From our experience searching large databases over many years, we have been able to achieve the levels of matching speed and accuracy needed to solve the most demanding biometric identification operation of all ¾ applying accurate, easy-to-use human identification methods in the real-time environment of commercial transactions where false rejection and imposter pass rate performances are critical elements of user acceptance and system effectiveness. Our ability to achieve the necessary performance in these areas stems from our experience with both law enforcement and civil AFIS applications and more than 16 years of research and development in fingerprint biometrics. This is the advantage we bring to the commercial identification marketplace.

Example: Fingerprint Identification in a Grocery Store

While we are currently evaluating the application of fingerprint identification technology in several different commercial settings, the product I have brought with me today has been specifically designed to help combat check fraud. Last October we were approached by a major grocery store chain to help them combat the problem of check fraud. This grocery chain sought a means for ensuring the integrity of the checks it cashed without inconveniencing or compromising the privacy of their customers.

Working in close cooperation with the store, our engineers designed and implemented a system that was easily integrated into the suite of technology already installed in the store’s checkout lanes. Those customers who choose to enroll and then use the system are offered increased check cashing privileges and can cash payroll checks at the checkout lane rather than at the manager's booth.

Let me take a minute to show you the device and explain how it is used. To solve the grocery checkout lane problem, Morpho developed a fingerprint reader-equipped base unit onto which a standard PIN pad device, like the ones commonly used now in retail checkout lanes to swipe your debit card and enter a personal identification number, can be placed. The two devices are linked electronically so that the fingerprint verification operation becomes an integral part of a personal check verification transaction. The readout display of the PIN pad also provides directions to the customer on how to use the fingerprint reader; for example, "Move finger up," "Move finger left," etc.

The device I am showing you is Morpho’s first-generation commercial product. It is really a miniature, self-contained AFIS, containing a scanner, image processor, fingerprint matcher – even a database. Subsequent generations of this device, which we are currently developing, will be much smaller and cheaper, but will be capable of exactly the same high identification accuracy, speed, and ease-of-use.

The device is easy to use, both for the store’s personnel and its customers. When a customer enrolls for the first time, he or she is prompted to place first one, then another finger on the device to create a record for the store’s database of pre-authorized customers. A camera under the glass captures an image of the fingers and software routines embedded in the device itself quickly identify the unique features of each finger. The system then prompts the customer to provide the same two fingers again to ensure that the original finger images and features were of sufficient quality to allow subsequent matches. Any combination of fingers can be used, though most people use their index fingers.

Once enrolled, the customer can use the system at the checkout lane whenever he or she wants to use a check to pay for a purchase. The customer puts either of their enrolled fingers on the glass of the fingerprint device while their purchases are rung up by the cashier. The camera under the lens captures a new image of the fingerprint, the fingerprint’s feature data is then extracted from the image, and a comparison is made with the corresponding record in the store's database. A positive match assures the store that the person cashing the check is the same individual who applied for the account.

The entire process is voluntary and private - during the transaction, no sensitive information passes from the client to the transaction provider or store employee. The fingerprint system both confirms the uniqueness of the individual when they enroll and verifies their identity when they cash a check. Since the pilot system was installed, customers have been enthusiastic about enrolling in the system, while at the same time the incidence of fraudulent checks has been virtually eliminated. A regional roll out of the system will begin later this year and may be followed by chain-wide installation.

This technology can be applied to almost every kind of commercial establishment. Any place where proving the identity of an individual is important - in a bank, a retail store, a hospital - is a place that can benefit from our fingerprint identification technology. We offer more than just identity verification ¾ our technology enables real-time personal identification that is accurate, secure, and private. There is no longer a need to swipe a card or remember an account or PIN number, just place your finger on the glass. If you've been enrolled in the system, you'll be recognized every time.

Summary

Biometric identification technology based on fingerprints is a mature, reliable technology based on the experience gained in dealing with many millions of records and tens of thousands of searches each day. We are working hard to make it even more affordable and efficient for commercial applications, where factors such as cost, effectiveness, and ease-of-use will determine the success or failure of any biometric product.

The question is no longer "Is it possible?" rather, the question is how biometrics should be employed so as to guarantee the right of each citizen to protect his or her identity. Congress now has the opportunity to define the legality of the use of fingerprints and other biometrics to achieve this goal.

I urge you to give this matter the careful consideration it deserves, and to support the positive benefits of biometric technology in safeguarding the rights and privacy of our citizens.

Now, I would like to answer any questions you might have.