Where users are is a part of who they are. There are many different reasons to verify that a user’s address information is accurate and correct.
A peer-to-peer marketplace might perform address verification as a part of its new seller approval process. A vacation rental app might want to ensure the addresses of new listings are accurate for logistical and safety reasons. An ecommerce company might perform an address validation check so that its outbound packages aren’t returned to sender or misdelivered.
Ultimately, address verification software is used to help organizations in two critical ways - to verify that the mailing address exists or to verify that the address information users provide matches their personal information.
Though companies have several options for address verification solutions, certain software is better for different use cases. Each solution has a different cost, accuracy, availability, and user-friendliness, so stakeholders must decide which type of address verification software meets their organization’s needs.
Address validation software takes a user’s inputted address information and compares it to a database of address information, such as valid street addresses, mailing addresses, postal codes, and other data. These databases are typically available via an address verification API on a subscription basis and can either be maintained by public organizations, like the postal service or DMV, or privately owned and maintained, as not all countries keep a civil address database.
This type of software can confirm addresses entered by users on e-commerce websites or marketplace platforms. By validating addresses before packages are sent, vendors can cut down on shipping costs and promote greater customer satisfaction. After all, no one likes to hear that their package ended up on their neighbor’s porch or returned to the sender. Validating mailing addresses helps reduce the likelihood of a misdelivery.
The software validates addresses in real time by comparing the user’s input with an address database and flagging or correcting any errors or inconsistencies. If you’ve ever experienced a pop-up window at checkout asking whether you’d like to replace your inputted address with a different version, that’s the address validation software at work.
However, it’s important to note that the “real-time” element of this solution refers to the timing of the database check or API request. The data itself likely does not update addresses in real time. These database-based solutions are more likely to receive updates on a monthly basis.
Address validation software can also be used to “clean” and normalize address information with additions like postal codes and apartment numbers, as well as standardizing abbreviations such as “St” for “street.” Achieving consistency in recorded addresses helps reduce potential confusion and improve the efficiency of address records.
Because the databases used for comparison may not always be up-to-date, it's essential to consider which software vendors work with the most current information. Also, different services may have different levels of coverage for different countries, so be sure to check their coverage rates by country before subscribing.
This solution can grow expensive for international companies, as subscribers may have to purchase separate database access for each new country of operation.
This type of address verification software works similarly to the address validation database software; however, they’re not the same. While the address validation software uses databases to confirm addresses primarily for accurate mailing, proof of residence is more closely connected to verifying a user’s identity by using address information.
Proof of residence software might ask users for inputs like utility bills showing a name and address, government-issued IDs, lease agreements, and other information to cross-reference against a database. This information is much more sensitive than a text-based address input. It also requires more friction, so it’s typically used by organizations like government agencies and banks and would be considered overkill for an e-commerce platform. Several different document types can be used to cross-reference against the associated databases.
In this case, the user is asked to submit a photo or scan of a government-issued ID, most commonly a driver’s license or passport. The address information on the ID is then compared to the past and current address information available in the proof of residence database to complete the address verification process.
Many banks in the US and EU are required to follow KYC or “know your customer” procedures to avoid facilitating money laundering and other criminal activity. This means that recent (within the last 90 days or so) bank statements are generally reliable documents for checking and verifying a user’s address data.
Utility bills mailed to a user’s house typically contain their legal name and correct address, making them helpful documents for address verification.
Credit reporting bureaus, like banks, are financial institutions responsible for keeping accurate, up-to-date PII about the people they report. Credit bureau records can be compared with user input to verify a user’s address.
One of the most popular use cases for address verification is to combat fraud and scammers. Using reverse lookup software, individuals and organizations can find more information about suspected fraudsters (or about good users with limited data) using data points like their phone numbers, email addresses, or other details.
Reverse lookup software then checks a database or multiple databases and returns any information about addresses, phone numbers, email addresses, or names associated with the provided input.
This software can find contact information for a good user, connect a phone number or email address with a name, or help nail down the identity of a bad actor.
However, to use reverse lookup software, users need to provide a piece of user data, like a phone number or email address. Companies can confirm this information by sending a code or link to an email and asking users to click the link or input the code.
Geolocation software uses real-time location data or the user’s current IP address cross-referenced against an IP database to confirm whether their location matches the address they input at onboarding. The majority of users create accounts and make large purchases from a trusted location like their work or home, so their geolocation is likely to match or approximate their address input. However, there may be a mismatch if a user travels outside a trusted location when the address verification happens.
Real-time AV software uses a combination of signals like GPS and WiFi to check a user’s real-time physical location against their address input. This approach can be more accurate than software that compares with address databases because the data collected is real-time, whereas databases may take some time to update. Real-time address verification technology has a few advantages over database software.
The fact that it collects location data in real time means that out-of-date information is never a concern, unlike with databases subject to periodic updates. Real-time AV is also a more cost-effective solution for companies operating in multiple countries, as there’s no need to subscribe to separate address databases for each new nation. Lastly, real-time AV software can collect location information regardless of whether or not someone’s address is listed in a database, meaning that people without an officially registered address can still successfully complete verification.
IP address databases associate IP with latitude and longitude coordinates, meaning a user’s IP address at the time of verification can be cross-referenced against one of these databases to determine the user’s approximate real-time location.
Some mail management software suites include postcard mailing and other physical address verification features. These services can automate sending mailers to a user’s self-reported address. The mailer typically contains a link or code that a user is asked to input, confirming to the software system that they successfully received the code and thus verifying that they have access to the address they provided.
When it comes to choosing the best address verification software, there are a few key considerations to keep in mind.
First, it's important to look for a solution that not only verifies the existence of an address but also cross-checks it against other information to ensure accuracy. Just because an address exists and is deliverable doesn’t necessarily mean it aligns with the other identity information provided by the user.
Manual review is costly in terms of both time and money, adding expense for a platform and introducing frustration for a user. By incorporating automated address checks into the address verification flow, platforms can keep costs low and wait times for verification down to a minimum.
Another important factor to consider is the software's integration capabilities—the best address verification software should be able to seamlessly integrate with existing systems and data sources to provide a more complete picture of address validity and accuracy.
By taking all these factors into account, organizations can choose the address verification software that best meets their needs. Regardless of which address verification system an organization ends up using, confirming user addresses can help marketplaces, social media companies, and other types of online platforms improve customer experience, reduce logistics costs, and support increased trust and safety.
To learn more about how Incognia has used real-time address verification to help platforms in the past, read our case study about how location helped automatically verify 72% of new users on a car rental marketplace.