In a world where 7 billion people exist, the names aren’t unique anymore. One name can be assigned to multiple people, but the question is how to uniquely identify each person. There is very little possibility that two persons with identical names have the same residence address. The most reliable way of identifying and classifying individuals is by names and addresses. The identification problem is observed more in online platforms where thousands of users onboard in a single day. Identity fraud and fake addresses are some of the issues of digital platforms. Online Address Verification System is used to classify online users efficiently while keeping their data secure.
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The affirmation of the address of online users through address documents issued by any reasonable authority is called address verification. Before address verification, the identity of the user is verified through the government-issued id documents. Then the address is verified against that identity.
Address Verification=Identity Verification
Yes, indeed a user’s address verification is acutely the identity verification. Address verification alone cannot be used as proof of address. Because someone can just steal a legitimate user’s address document and use that address. Then if he can commit crimes by using that address, the legitimate user will be held responsible for that. Hence identity must be verified before address verification.
Here is the complete process of online address verification:
- User registers on a website
- Identity documents and live selfie is uploaded
- The website performs identity verification by analyzing his identity documents and facial selfie
- The user uploads the address document’s image
- The address data is captured, verified, and stored
Why Address Documents?
Although identity documents contain the address of the user, they cannot be used for address proof. The intention is that they do not have a recent or updated address. A person may have collected his identity document ten years ago and since then changed his location multiple times. But did not update the address on the identity document because it is not easy to alter the data on government documents.
To have the most recent address, the address documents are used. Address documents include bank statements, utility bills, insurance certificates, or employee letters. These documents are accepted only if they are issued within three months. The address checker system relies on these documents because the issuance authorities keenly verify the address and then mention it on their documents.
In the Know Your Customer (KYC) industry the identity documents are known as Primary documents while address documents are known as Secondary Documents.
How does Address Verification help?
Fraudsters commit these frauds by stealing a credit card or having access to the number, expiry date, and CVV number of the card. CNP is done while purchasing over the phone or email. As there is very little verification on phone calls, the customer tells and merchants verify the information. The merchant does not verify who is making an order, thus giving the product to a fraudster. This creates trouble for both the actual cardholder and the merchant. The cardholder loses his money and card while the merchant loses his market reputation. The customer can sue the merchant for not verifying the transaction.
If address verification is used at the time of purchase where the customer also has to tell the address linked with that credit card. Having no accurate address information, the purchase will not complete. The address verification can verify the identity and address of the customer. This will maximize the number of legitimate purchases, reduce chargebacks and give confidence to these businesses.
Detection of Shell Companies
These companies are only on paper and do not have any office location or employees but can have a bank account and an attractive webpage. They are used for providing a channel for financial crimes. Shell companies are used by large businesses for tax evasion and financial record manipulation. Sometimes they are also used for scamming other businesses.
Address verification verify the addresses of businesses, detect shell companies and give a trustworthy and financial crime-free environment. This will assist a business to have more customer trust and better regulatory compliance.