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Due to the increase in chargebacks and other illicit practices, businesses have developed rigorous procedures for validating persons. To ensure unmatched customer onboarding, e-commerce companies and other online enterprises have established identity verification techniques including address verification. Without identity verification, the likelihood of illegal activity rises dramatically. As a result, address validation is critical to keeping the organization safe from various fraudulent actions.
An address verification system is used to validate the address of the user before they make any transactions. This guarantees that only genuine users are onboarded and that all payments are performed safely. To authenticate the identity of the consumers, the firm must ensure that the address exists.
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The Relation Between Address Details and Identity Fraud
Bank Accounts
If someone’s address is stolen, criminals may use it to create a false identity. They may open a bank account under that mask. Since a stolen profile was used, law enforcement officers will be unable to identify the genuine culprit if the account is used for unlawful activities like money laundering or terror financing. In addition, the victim suffers so they must show the authorities how their personal information was stolen.
Fraudulent Organizations
Deceptive actors frequently use a victim’s stolen address to promote their unlawful business. Anyone who wants to do business with a finance company nowadays must offer a current and accurate address. When organized criminals don’t have access to a legitimate and lawful address, they use someone else’s address to appear legitimate to financial firms. Verification of address helps institutions stop criminals to get away with their illicit behavior.
Mailbox Crime
Mailbox identity fraud is when a criminal steals a victim’s address in an attempt to induce identity fraud. Criminals may request a change of address at the postal service if they get someone’s letters. The mail of the actual person will be delivered to the culprit as they have changed the address Furthermore, an individual’s personal information may be put at greater risk as a result of this. This type of deceit, on the other hand, can be easily avoided if the post office implements an AI-based address validation tool to check customers’ identities.
Sectors Vulnerable to Address Fraud
The address is an important part of a complete identity record. Without a person’s or company’s address, it is impossible to completely examine and check them as evident from Shufti Pro news. Financial institutions and internet firms are among the industries with the greatest demand for address validation solutions. Many of such firms have started accepting investments such as Shufti Pro funding, recently done by Upata partners.
Online Stores
In the aftermath of the Coronavirus outbreak, businesses are shifting to virtual environments. It’s due to market demand and the convenience with which electronic business transactions may be completed. However, aside from the ease of use, there are a few roadblocks that make it difficult for internet businesses to succeed. Verifying an address remotely is one of these major hurdles.
If businesses do not verify address of the user, goods may be sent to the wrong address. The business is put under an undeserved financial burden because wrongly sent goods are returned to the company. As a result, address verification systems lower the risk of incorrect or fake addresses while simultaneously accelerating the online buying process.
Financial Institutions
Financial institutions, it is appropriate to suppose, are the most susceptible to identity theft. When criminals use hacked documents to create fictitious identities in order to open bank accounts, the corporation is forced to cope with the consequences of permitting criminals into the financial industry. If anything happens, these firms will be in flagrant violation of KYC/AML regulations. As a result, regulators have imposed penalties on these banks for failing to fully verify their clients’ identities.
Furthermore, because the institution executes illicit transactions, it must give mandatory refunds, often known as chargebacks, to identity theft victims. As a result, non-compliance penalties and chargebacks must be paid by these institutions. Thus, financial institutions should use online address verification services to stop criminal conduct.
Final Thoughts
Chargebacks, account takeovers, and other types of fraudulent activity are on the rise. While it is critical for all organizations to resist these crimes, fraudsters have devised increasingly sophisticated techniques to further their malevolent goals. Traditional identity verification processes are no longer sufficient. Verifying addresses would help to strengthen the KYC process. It can assist any e-commerce company in lowering chargebacks and fraudulent transactions. The address verification solutions are a low-cost, dependable option that can be quite advantageous to small companies.
