Requiring consumers to verify their current address can be an important part of confirming their identity, detecting bad actors, and preventing people who live outside certain areas from accessing your products or services.
What is proof of address?
Proof of address is when an organization requires someone to verify their current address. The online proof of address process generally involves submitting a recent and eligible document that contains the individual’s address. The image and document are then checked for authenticity, and the address is compared to the person’s previously stated or submitted address. Additional database and address verifications may offer more assurance that the address is valid and current.
Sometimes called proof of residency, proof of address is commonly part of a larger identity verification (IDV) process. Many organizations require proof of address. For example, banks might ask someone opening a new account to verify their current address. Local, state, and federal government agencies may also require proof of address when someone wants to receive benefits, register to vote, or get a library card.
Why is proof of address important?
Collecting an address is a required component of a customer identification program (CIP), along with collecting a user’s name, date of birth, and government-issued identification number. And organizations that have to comply with Know Your Customer (KYC) and anti-money laundering (AML) regulations, such as financial institutions, may require proof of address as part of their risk-based procedures for verifying new customers’ identities.
But, even when it’s not required, collecting and verifying a current address can be important. The extra step can help deter and detect bad actors, protecting you from fraud. You may also want to verify someone’s address so you can send them information, disclosures, a card, or other information by mail or in person. And it can be important if you’re running a geographic-specific service, such as a neighborhood-focused app or marketplace.
Some organizations also have geographic constraints because of licensing requirements and local laws, such as insurance companies and cryptocurrency platforms. They may need to confirm proof of address to comply with these requirements or laws, along with applicable KYC requirements.
How does proof of address work?
In some situations, organizations may require a customer to visit a local office or branch and bring documents that can verify their current address. Alternatively, companies might send a code to a new user’s address to verify the person lives there. Once the individual receives it, they then use the code to finish setting up their account online or access additional services.
But these aren’t common today. Instead, organizations regularly turn to online proof of address processes, including customizable and highly automated services that can quickly detect and verify addresses. With these tools, the individual begins by uploading an image of an acceptable proof of address document. A document verification check can help confirm whether the document or image was forged or altered, and the verification system can extract the address from the document.
Persona uses optical character recognition (OCR) to extract information and offers guided and unguided extractions for proof of address.
A guided extraction allows the system to look for a specific address — perhaps one that you have from an application or a government ID verification. Unguided extractions look for a particular type of information, such as an address, name, or phone number based on pattern matching. Unguided extractions can be useful if you’re looking for information that you don’t already know, but guided extraction will generally be more accurate.
Organizations can set their own rules for proof of address checks — for example, whether they want an exact match or are okay with partial matches. They’ll also need to decide what to do if there’s only a partial match or a mismatch, such as sending the document to manual review, requesting a new address document, requiring additional IDV steps, or declining an application.
Proof of address documents
Although many government-issued IDs have an address on them, the address isn’t always current. So, organizations may use an ID to verify someone’s identity and a separate document to verify their current address. Commonly accepted documents for proof of address include:
- Utility and water bills
- Statements from financial institutions
- Government-issued correspondence
- Pay stubs
- A lease agreement
These documents generally need to be from the previous three to six months to qualify — which can be automatically detected through recency checks during the extraction process. However, some documents, such as a lease agreement, can commonly be older.
Consumers may alternatively be able to get a landlord or property manager to write and sign a proof of residency, or affidavit of residence, form. But some organizations won’t accept these letters, and it’s often more time-consuming for consumers than submitting one of the documents above, especially if the letter has to be notarized.
Optional third-party database checks
Database verifications compare a person’s stated or extracted address against a trusted third-party source, such as a credit bureau or the American Association of Motor Vehicle Administrators (AAMVA). For example, an AAMVA check can confirm whether the street, city, state, and zip code extracted from a driver’s license match these elements in the AAMVA’s database. However, the AAMVA only returns a true or false for each element, and this type of check is only available in participating states.
Some organizations also use address validation services to help detect bad actors and potentially fraudulent transactions. The services confirm whether an address actually exists, but don’t provide proof of address. Persona’s Address Lookup Report returns metadata related to the address along with a Google Map and Google Street View within the Persona Dashboard, which can help you easily confirm the address’s authenticity and type.
Getting proof of address right
Identity verification and proof of address checks can be important parts of detecting bad actors, preventing fraud, and verifying that you’re working with users who live in your target areas. They’re also a regulatory requirement for some organizations. However, you may be able to choose how you want to verify someone’s address.
Sending postcards with verification codes or requiring in-person checks can be costly and time-consuming, and it’s not a practical option for organizations that want a seamless onboarding experience. Online proof of address processes are often much faster in general, but you’ll still want to tailor the experience based on your needs and goals.
Persona offers a customizable approach to IDV and document verification, including proof of address. You can securely collect documents and adjust the verification checks and extraction methods to meet your needs. The entire process is also part of a larger, customizable workflow that you can use to dynamically add additional checks based on risk signals. In short, you can make it easy for good users to quickly move through the process and throw up roadblocks to stop potential bad actors.