Preventing Frauds With Effective Address Verification Methods

Address verification services (AVS) act as a checkpoint. AVS checks a consumer address by validating it against the billing address during an online purchase. Initial parts of a street address, numbers, and zip code are verified separately. Merchants can immediately notice if a consumer is entering the correct details by using address verification. This service helps to protect small and large businesses from any fraud attempts by vetting bad customers out of the system.

It can also help businesses to combat chargeback frauds by enabling a comprehensive AVS solution. Usually, merchants are working with third-party solution providers. These solution providers integrate their address verification solution into the client’s system. When merchants provide address details of their customers online, the system automatically captures relevant information. The system compares the captured information with an address on the document to authorize users for access.

According to the Global Data Consortium, “Fortune 500 companies are unable to verify almost 60 percent of their international addresses”.

Address Verification Service

Banks usually perform address verification during the card authorization process. The verification can be conducted by phone, in case the cardholder is absent. The address on a bank file is matched with the billing address to make sure that the transaction is carried out. Although, it’s also possible that the transaction could be declined even if the billing address was right. There can also be other reasons to decline transactions, such as outdated information, misspelled address, etc.

Moreover, address verification plays a vital role while confirming that the person placing an order and cardholder identify as the same people. This is the reason, address authentication is helpful for merchants during an order review. However, AVS checks also confirm the address and zip code entered into the order match with the record of the issuing bank.

Most often, address verification request along with the payment authorization request is automatically placed by the payment processor. The request usually moves to the issuing bank with information of the billing address used with an order. Address verification service then returns a code to either provide an address match or no match.

Response Codes and Verification

Sometimes the bank card payment processor performs address verification. The verification process checks all fields present on the form and bank files to authenticate the information. Authentication check also verifies the zip code.

The system automatically generates the code that authenticates the information as either perfect match, no match, or partial match. In case if the merchant does the verification manually, they could run a risk of a fraudulent transaction. This could lead to a financial crime if a merchant is held liable to sell something to someone with a stolen card.

Stolen Cards

Address verification service acts as a security measure that helps with significantly reducing the chances of fraudulent transactions either on debit or credit cards. Ellen Pierson says Sometimes the transaction could be carried out quite easily by using a stolen card because address verification software is only responsible to validate the card’s billing address. Because, if the card address matches with the bank documents, the transaction wouldn’t be turned down.

Keeping up With Compliance Requirements

According to FATF, all organizations are required to perform identity verification to maintain a high level of security for all individuals. Further, it would also build a strong reputation for the brand. Therefore, address verification is not just required for businesses to verify the identity of people but it’s also required to ensure businesses comply with KYC/AML regulations. However, address verification solutions are quite important for online businesses to comply with strict guidelines. Over the years, chargebacks, account takeover including few other fraudulent activities have increased. It’s imperative for businesses to closely monitor such threats by integrating sophisticated solutions. AI-powered solutions would help organizations perform better to prevent fraudsters from malicious activities. By adapting address verification systems, companies could ensure a robust KYC process. This would help to reduce fraudulent transactions and chargebacks.