Address Verification – Why businesses perform it


Customers are the primary source of profits and growth of any business. Onboarding a reliable and secure clientele is crucial and the best way to do this is to verify the identity of customers before onboarding them. So the business entities are practicing different types of identity screening mechanisms to verify the identity of the customers. Generally, the name and ID card numbers were verified previously, but with the rise in fraud, businesses prefer to get more personal credentials from the customers. So address verification is also gaining hype in the industry.

What is address verification?

Address verification is the process performed to verify the address of the customers at the time of registration or before accepting any orders from the customers. The primary motive behind address verification is to prevent the risk of onboarding an identity thief or accepting fraudulent payments from a con with a stolen credit card, it also prevents account takeover fraud.

Most of the time address verification is performed using some sort of address verification solution as manual verification is not possible fearing false positives. Such solutions perform ID card address check on a customer in real-time through an identity document and show the results as well in real-time. It is performed using Artificial intelligence (AI) so the whole process from the extraction of information from the identity document to verification is conducted automatically. The results are delivered within seconds and it enhances customer experience, making it yet another factor behind the increased acceptance of digital address verification systems.

Why businesses perform address verification of customers

As mentioned above businesses are adopting address verification, and there are several reasons behind it. A few reasons are mentioned below.

Fraud prevention

It is quite clear now that fraud prevention is the reason behind address verification and it is because the businesses are exposed to a list of frauds. Identity theft, credit card fraud, account takeover fraud, synthetic identities fraud, etc. All these frauds can be identified with the identity verification process that includes address verification. If a customer’s address is verified it gives reliable information regarding that entity which can be used in case of any other fraud. For example, if a customer flees with funds or doesn’t pay on time, the business will have a reliable address to trace him. Or is a fraudster tries to make payments through someone’s stolen credit card, the address on his identity document will not match the address the customer has provided at the time of registration, and the fraud will be identified beforehand.

To reduce chargeback and wrong shipments

Often the customers provide the wrong address by mistake and it leads to the wrong shipment. It causees loss for the e-commerce platform, and inconvenience for the customers, sometimes they do not pay for re-shipment. So if address verification is performed it reduces the chances of the wrong shipment.

To perform regulatory obligations

Businesses are obliged to verify their customers and often this identification includes address verification. As Enhanced Due Diligence (EDD) is performed on high-risk entities, it includes address verification. As money laundering and terrorist financing are increasing the businesses are exposed to more high-risk entities so address verification is becoming inevitable for them. Address verification service providers often provide services with banking-grade data security, so data protection regulations are also fulfilled.

To conclude, the fraud risk of businesses and increased the compliance obligation demand robust customer identification mechanisms. Enhanced due diligence is the need of the hour. Address verification through AI-based solutions is gaining hype as it fulfills the fraud prevention and regulatory obligations of businesses and doesn’t affect the customer experience negatively.