Proof of address — quickly and accurately verify addresses
An address is a vital identification attribute to verify a person’s identity. Proof of Address is often requested when opening a bank account or other government account to confirm residence, help Know Your Customer (KYC) compliance and prevent fraudulent activities.
Proof of Address also ensures services are only available to customers within a specific geographical area. Beyond compliance, address verification also helps reduce fraudulent or unwanted activities online. For example, social networks or neighborhood apps may want to restrict users to residents-only to avoid solicitors and advertisers from spamming their communities.
Traditionally, providing Proof of Address is a manual, cumbersome process that delivers a poor account opening experience. Relying on manual checks to verify residency documentation introduces the potential for human errors and creates unnecessary friction and delays for customers.
Customers have to locate, scan and send pages of documents in the required format. What should be an instant onboarding experience ends up taking days (or even weeks) due to manual checks and processes. As there are many document types and providers, document review standards can vary widely, creating possible failure points due to forgery or theft. In an era of instant gratification, relying on manual checks of physical documents is inefficient and better processes need consideration.
What is Proof of Address?
Proof of Address is evidence that a person has an actual physical address that matches their stated address. The real address needs to exist, and there must be supporting evidence that the person currently resides there. Billing statements from legitimate organizations that go to the same address help prove the person lives there.
There are several ways to provide location evidence, including a proof of residency letter (Affidavit of Residence). However, the most common way to help prove location is by giving documents that indicate the address, the dates of service and the person’s name on the account.
Each organization has different requirements for acceptable Proof of Address documents, but common examples include:
- Utility bill
- Tax bill
- Bank statement
- Credit card bill
- Tenancy agreement
- Employment letter
Proof of Address, crypto and other use cases
Proof of Address is another strong data point for identity verification purposes. As an additional risk-mitigation layer, it verifies a person receives services at an address. Matching that information to data acquired through identity proofing provides more evidence that the person exists and is who they say they are.
In Proof of Residence situations, services are only available to people who reside in a particular area. For example, governments often limit access to services based on where they reside. Proof of Address provides evidence that a person currently lives in the specified area and has maintained a residence there for a prescribed time.
In financial services, some offerings are only available to residents of that jurisdiction, or participation is otherwise restricted based on where the person is. For example, cryptocurrency exchanges in Europe might not want to accept U.S. customers to avoid sanctions by the SEC for dealing in unregistered securities. Or people living in sanctioned countries will require additional due diligence procedures, and Proof of Address can help ensure these people go through the correct checks.
Restrictions like these might result from legal or regulatory requirements, or they may instead be company policies. Vetting location information through Proof of Address helps these organizations to provide the service online and ensure that they meet any regulation or internal policy/procedural requirements.
Problems with Proof of Address documents
Proof of Address process improvements have been slow, especially compared to all the technological progress of proof of identity. Here are some of the known Proof of Address issues.
No Proof of Address template
Consider how many different types of services could offer residency evidence. Between all the various organizations, different styles, formats and information, the problem of determining the authenticity and accuracy of a residency document becomes clear. Depending on the use case, there might be thousands of potentially acceptable documents and little to no similarity or guiding principles to base decisions on.
Poor onboarding experience
A new customer wants to sign up and start using the service quickly. They don’t want to start going through files to find a document, send it in, scan it properly and then wait for acceptance. One survey discovered that 50% of application drop-offs were due to asking customers to produce identity documentation.
Part of the issue is the lack of standards already discussed, which creates confusion for the customer, as they have numerous options. Beyond that, there’s the problem of dealing with paper-based documents in a digital environment. Organizations require customers to become document scanners; any lighting or placement issue slows down the process and leads to further customer aggravation.
Costs of document handling
Besides the possible significant errors and slow processes, costs to handle manual checks can add up quickly. While processing a few dozen applications per month is doable, processing hundreds or thousands of applications becomes a significant and inefficient task. There are also considerations for record keeping, rechecks and other document handling costs.
New Proof of Address processes
Fortunately, new technologies enable Proof of Address processes that speed up onboarding, automate address verifications and help deliver better compliance and fraud prevention outcomes.
UtilityID is a consent-based identity verification service that uses utility provider data (bills and records) to verify addresses, removing the need for manual download, upload and scan of documents and other high-friction document verification processes.
Trulioo customers can meet real-time Proof of Address compliance requirements, providing a faster onboarding experience. UtilityID reduces onboarding times from hours (or even days) to minutes, decreasing customer friction and the risk of drop-off during the sign-up process.
As an automated process that uses the most accurate and up-to-date method — utility bills — UtilityID provides a higher address accuracy level than other solutions. The benefits include:
- Reducing address fraud
Lessen the risk of onboarding non-compliant or fraudulent customers.
- Significantly contracting operation times for manual document review
These high-friction and high-touch methods are high-cost processes that ultimately burden the user and risk their complete attrition from the onboarding process.
By providing an easy-to-integrate alternative to manual document verification for Proof of Address compliance, UtilityID can remove the issues associated with ID document verification: risk of manual review, high friction and intrusiveness, and higher cost per verification.
Here’s how we verify Proof of Address.
One standard process in identity verification is the use of address verification. Customers submit their address information, which is then matched against database records of credit bureaus, utility companies, government agencies and various other data sources.
Address validation helps ensure the address information has the correct hierarchical alignment for further analysis. If the customer has resided at that address for a while, address verification can provide a match or no-match signal.
Note, that the success of this type of match relies on up-to-date address information in those databases being queried.
Having an address verification is a substantial step for identity assurance. In cases where identity documents have been forged or manipulated, incorrect address data would produce a no-match signal. On the other hand, an address that matches a known identity connects the person to a real-world location, especially if the person has lived there for a substantial period.
Mobile network operator (MNO) data, available with GlobalGateway MobileID, is considered to have some of the most reliable address information because consumers are more likely to keep their mobile phone billing information accurate than other billing sources.
IP address verification
Any web form fill contains numerous unseen metadata points. In particular, the IP address can provide another powerful location data point that can assist in Proof of Address checks.
An IP address is the unique number of the customer’s device to connect to the internet. The physical location of that device can then be determined by looking up the IP address. That location information can then be queried against the address provided to determine if there’s a match.
While an IP address can provide a layer of location data, it’s essential to understand that this information is not necessarily 100% accurate. Users might be on an extensive network, which transfers users to a non-local device, or they may be using a VPN, which masks their actual location.
Another layer of location data is geolocation. Using geolocation information from GPS or MNOs makes the data difficult to forge or alter and offers a proximity indication, which is generally precise to within 125 meters.
Geolocation can offer a solid signal to understand the precise location. Depending on the use case, this opt-in information helps stop potential fraudsters or out-of-area applicants from ever becoming a customer.
Proof of Address best practices
Every organization requiring proof of Address needs to examine its legal requirements, risk strategy and operational considerations. Understanding what is best for your customers and your organization requires determining what technologies are appropriate and how to integrate them into a holistic solution.
Perhaps, due to your regulatory requirements, you do need a document. In that case, collecting the document to satisfy requirements is a given, but the actual address check uses one of the technologies mentioned above. This approach would likely meet requirements, speed up the check, and provide additional location analysis and fraud prevention measures.
Or, perhaps you need to include age verification with location data to ensure that your age-restricted products or services meet local destination requirements. In that case, a document verification check to analyze age and identity and a geolocation check to determine the exact location could be the right solution.
Revamp how you verify addresses to increase identity assurance while delivering a better account opening experience for your customers. Get accurate, automated address verification for Proof of Address in seconds without manual review or requiring customers to upload documents.
This post was originally published on February 2, 2021. It has been updated to reflect the latest industry developments and best practices.