Understanding KYB and Merchant Verification blog

In this blog we’ll tell you why customer address verification is so important, and how you can do it easily, using live utility data. 

This new automated digital method now offers the most up to date source for address verification, and is the channel that customers and businesses are most happy to give access to, for KYC & KYB. We explain why here…

What’s the issue?     

Identity fraud is predominantly due to synthetic identity theft, when a fraudster uses a combination of fake and real information to create a brand new identity, which is one of the reasons why proof of address is so important. 

Beyond this issue, using proof of address as a form of identity verification means your business will comply with directives and regulations, such as AML5, and protect it from otherwise unavoidable risks.   

Why do you need to prove address?

To avoid serious risks. Proving customers’ addresses is an efficient way for companies like financial organisations, e-commerce businesses, online marketplaces, and online gaming and gambling sites to be totally sure of their customers’ identities.

A good example is Airbnb. Within the past year they experienced a rise in fake hosts, causing customers to get scammed. Airbnb had not properly verified that the hosts lived where they said they lived, so hosts could list a great property down a more desirable street as their own, to then reveal an inferior property at a different address when the guests came to stay. 

High-value e-commerce transactions also need proof of address, so that an expensive purchases such as technical equipment, or even a car, goes to a confirmed and correct address. If a fraudster has the potential to use stolen card details to buy something expensive online and send it to a different address, they will.  

There are regulations for a reason 

They stop fraud. If you follow KYC, KYB, and AML regulations, you hugely reduce the threat and risk of fraud to your company. Using robust identity verification methods mean you can avoid the costs of fraud, avoid legal complications, and be confident in expanding your customer base. 

Proof of address is a basic requirement for KYC & KYB and AML compliance in most countries. However, there are some variations, for example Hong Kong does not require proof of address, because residents often change addresses, and their documents can easily be forged. Meanwhile, places where online gambling is legal in Europe, the U.S. and elsewhere, require proof of address. 

4 ways to verify addresses 

Here are the most common forms of document used for address verification: 

1. Driving Licence 

A driving licence shows name, address and date of birth. However, an issue can be that addresses aren’t current. Many people had a licence issued years ago, and have since moved, and forgotten to, or don’t bother to update the address. Another issue is that globally they are easy to fake, as thousands of fraudulent licence numbers are in use today. 

2. Passport

Passports typically show addresses, but these too can be out of date, with many customers living at a different address than what’s shown on their passport which may have been issued almost 10 years ago. Also, on some passports current address is not printed, but instead left for the owner to write in themselves. 

3. Bank Statement 

A recent bank statement can qualify as a way to verify address, as it shows name, address, and date. If the statement is recent it can be taken as proof of address. However, customers have security concerns. Financial services in Europe have seen almost 40% of customers abandon transaction and onboarding when asked to use it. They simply don’t want to provide such sensitive information. 

4. Utility Bill

Utility bills have been used for proof of address – in paper form – for quite a while, for example in applying for a government-issued ID. But now the process is becoming digital. In terms of recency, this is the strongest data point for address verification. Utility bills provide the most recent address of a consumer. While people may not update their address on their driver’s licence or passport, they’re very unlikely to keep paying a bill every month for a place in which they no longer reside.

In utility we trust

At Hello Soda, we created UtilityConnect to allow companies to verify customer addresses with certainty and speed. UtilityConnect can access 6500 different utility providers around the world, to verify an address in less than a minute. 

It’s a fully automated system that works better than traditional checks, and increases onboarding rates, and onboarding time from days to minutes. 

It means identity verification at the speed you and your customers need. 

You can read more about UtilityConnect here. A cloud-based system that means no one can tamper with the data, and the need for manual checks is removed. It’s the smart and savvy way to verify addresses in the digital world, avoid fraud and comply with new regulations.

If you’d like to find out more, or see a quick, free, and hassle-free demo, then click here.

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