Address Verification — Restricting Chargeback Fraud In Businesses

The e-commerce industry is rapidly growing, showing no signs of slowing down. According to a report, online e-commerce businesses generated $4.9 trillion in revenue worldwide in 2020. Verification of address is the most essential component of an online business. Inaccurately typing an address can cost businesses time and money. Due to increased chargebacks and other fraudulent activities, enterprises are using efficient methods for verifying individuals.

Online retailers and businesses have developed reliable authorisation tools and verification procedures to guarantee genuine client onboarding. The criminal activity becomes much more sophisticated without an adequate ID verification system. The frequency of refunds increases gradually daily, and so does fraud. Therefore, online address verification protects online businesses from various scams. The popularity of address verification services has grown recently, and this is due to several factors. Let’s go over each significant component of this solution so that it can decide which is best for the company.

An Insight to Address Verification

Businesses use address authentication methods to verify customer addresses before each transaction as a security measure. This ensures that all interactions and dealings are secure and limited to authorised users. It is essential to confirm that the address is correct to verify the legitimacy of the customer.

The address verification service uses cutting-edge AI technology to optimise customers’ address information. Businesses can reduce chargebacks and shipping costs associated with fraudulently providing incorrect or misleading addresses. It also provides a foothold for reputational risk. This increases the level of security for AML/CFT standards.

Why is Online Address Verification Important?

Due to fraud involving chargebacks and returned deliveries, e-commerce companies experience significant annual losses. Delivering goods to the intended location is challenging because con artists frequently give inaccurate addresses. Address verification systems provide additional security that lowers the likelihood of fraud. Having a reliable method for verifying addresses is more crucial than ever. Numerous factors affect the need for this service by the business. The following are some reasons:

• Battling Fraud

The primary reason a business would need to verify the address is for this reason. Address verification is crucial to all companies, financial or online retailers. According to Statista, chargeback fraud cost online businesses $20 billion in lost sales in 2017, making it a problem for them. Companies must implement security measures to protect their online operations to save their business. Verifying addresses enables companies to manage reputational risk and lower online fraud better.

• Decrease Returned Shipments

Business owners will likely experience this issue if their addresses need to be corrected. Returning deliveries is one of the biggest disappointments for any company. According to CNBC, online sales will reach $123.9 billion, with refunds accounting for 30%. These goods have a $37 billion estimated cost. Controlling and reducing the inaccuracy of deliveries is possible with the help of an AI-driven address validation system.

• Enhanced Client Experience

All businesses strive to enhance the user experience, but online retailers work hard to give their customers the best. Companies can be sure that their list of clients is up to date by using online address verification. Because of this, companies can reach them with ease and offer quicker delivery services.

• Better compliance with FATF Recommendations

To maintain business integrity and ensure consumer safety, every business must adhere to FATF regulations regarding identity verification. Address verification allows online companies to verify the identity of their customers and effectively comply with KYC and AML regulations. Additionally, 6AMLD’s regulatory approvals make compliance difficult. However, approval services make it easier for organisations to comply with the law.

Conclusion

Account takeovers, chargebacks, and other fraudulent activities are becoming more frequent. All businesses must fight these crimes because con artists have, regrettably, developed more advanced techniques to achieve their nefarious goals. Currently, the methods used to verify identities need to be improved. Systematic address verification can enhance the efficiency of the KYC procedure. It can assist all e-commerce companies in lowering chargebacks and fraudulent transactions.

For organisations to prevent fraud and protect the platform, an AI-based address verification system is a need. The technology facilitates easier client onboarding and ensures operations go through several cutting-edge models without a hitch.