Quickly collecting and verifying addresses is often an important part of improving customer service and preventing fraud. Address verification systems can perform these services and checks — helping ensure you don’t approve a new account that has a fake address or pay for a package that will get returned as undeliverable.
Three types of address verification
Although we’ll primarily explore address verification as part of onboarding and identity verification, organizations commonly use this term in three different ways. Let’s go through all three to clear up any confusion you might have come across while trying to learn more about address verification.
1. AVS for preventing fraudulent card-not-present transactions
An address verification system (AVS) generally refers to a fraud-prevention tool for credit and debit card transactions. When a merchant processes a transaction without using the physical card — a card-not-present (CNP) transaction — the AVS can check whether the order’s billing address or zip code matches the address and zip code the issuer has on file.
The AVS informs the merchant whether there’s a full match, partial match, no match, or no results available. Partial and no matches — or lack of results — could be a red flag, and merchants may put rules in place to automatically decline these transactions or require additional verification.
But, as is often the case with preventing fraud, merchants need to decide how much risk they want to take and consider multiple fraud-related signals when deciding whether to approve or deny a transaction.
2. Verifying and validating addresses for deliveries and marketing
Address verification systems can also help you confirm addresses exist, accurately collect addresses when users fill out forms, and clean up the address information in your databases. These generally aren’t called AVSs, but providers may use address verification and address validation interchangeably — or prefer one term based on their service’s capabilities.
Many providers can confirm address information based on authoritative sources. For example, the United States Postal Service maintains an address database, as do postal services in other countries and shipping companies, like UPS and FedEx.
Certified service providers can help you standardize address formatting to align with USPS preferences, correct misspellings, add additional address information, and update old addresses (such as when a street name changes). Standardization can also help your company qualify for discounted shipping rates and avoid errors that could otherwise lead to undelivered packages.
3. Address verification for identity verification
You may also want to verify a person or business’s address when onboarding new clients or processing transactions. For example, as part of your Know Your Customer (KYC) or Know Your Business (KYB) process, you may want to verify that the stated address exists.
A database verification can help confirm that the given address matches records from an authoritative source. Or, you might require additional documents, such as a pay stub or utility bill, as part of a proof of address check.
If you find someone claiming an odd location, such as a middle school as their personal address, that could be a red flag. An invalid address could also be a sign of fraud, although typos may lead to false negatives.
Using address-related tools during onboarding
Collecting and verifying addresses when you first onboard new users can help you identify bad actors, preempt shipping problems, and enforce standardization. Here are two tools that might help.
Predictive type ahead — also called address autocomplete — can suggest addresses as someone types. Some services even use device fingerprints, such as the device’s IP address or location data, to make more relevant suggestions. And some address verification system providers offer this tool via an API.
Address autocomplete can make it easier for your users to fill out their address when they create a new account or place an order — and therefore make them more likely to finish creating the account. They might even be able to choose the correct address from a dropdown menu after typing just a few numbers and letters, which can be especially helpful when using a mobile device.
Autocomplete suggestions can also help organizations standardize the addresses they collect. However, some service providers populate the list with best guesses, which might include fake addresses. To ensure the addresses are real, you may want to use an autocomplete service provider or database that cross-references the addresses with an authoritative source.
Additionally, you might want to use another type of identity verification, such as a database verification, to confirm the address exists and belongs to the person or business.
Persona’s automated identity verification processes can help organizations quickly verify individuals and businesses. However, sometimes you may want to request additional documentation, verifications, or reviews. One tool we offer is Persona’s Address Lookup Report, which lets you look up the metadata related to the address and see the address on Google Maps and Google Street View.
For example, you might use a business address lookup report to confirm that the stated business address is a valid business address during the KYB process. If you see an image of a government office or a location that clearly couldn’t belong to the business, you might decide to decline the application or request additional proof of address.
Or, a bank might find that a new consumer’s stated address is incomplete — it may be theirs and be real, but it isn’t deliverable in its current format. An address report can help the organization collect the missing information and update the consumer’s profile before sending welcome documents and cards.
Any company that sends mail to customers — whether that’s a physical product, card, advertisement, or bill — can benefit from having a standardized and validated list of customer addresses. Some organizations, such as financial institutions, may also need to collect and verify customer addresses to comply with KYC and KYB requirements.
Address verification service providers can help organizations collect and validate addresses, and offer tools like address autocomplete to streamline the process. But identity verification comes in when you need additional assurance that you’re not dealing with a bad actor. With Persona, you can tailor the identification process based on your needs and dynamically adjust the process depending on each applicant’s risk profile.
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