Long ago, the worst-case scenario of not verifying an address was the occasional letter arriving at the wrong mailbox. In today’s e-commerce, with Know Your Customer (KYC), Know Your Business (KYB), and Anti-Money Laundering (AML) compliance requirements, address errors have become even more costly. Now more than ever, we need to ensure addresses are valid and deliverable, address formats are consistent, and input errors are nonexistent.
As creators of products and platforms that rely on correct addresses for efficient service delivery, we can’t simply hope our users will always supply valid, accurate, and authentic addresses. We need to employ solutions to parse and standardize the provided address properly.
At the same time, we don’t want new users to feel daunted by the process of inputting addresses. An efficient, customer-centric address verification solution is invaluable for ensuring accuracy without compromising customer experience.
Address verification enables us to confirm that a mailing address exists. An address verification tool checks that the address is registered with the respective authority and exists on their official database. We can use address verification during the input stage, but we can also run it in bulk to flag invalid or undeliverable addresses and identify problems with address data in an existing database.
In this article, we’ll explore seven intriguing ways we can use address verification to ensure compliance, improve our business, and create a superb customer experience.
1. Prevent fraud and scams
Address verification can help prevent fraud and scams by catching fake addresses before they can do any harm. This need for fraud prevention cuts across every industry.
Knowing that our users, customers, business owners, and partners live where they claim can help us keep potential bad actors in check. It’s harder for a fraudster to commit a crime when they know their location isn’t a mystery.
Businesses in the sharing economy, like Uber and Airbnb, need to establish a sufficient level of trust. With incidents like deceptive Airbnb property listings and rideshare driver misconduct rising, knowing where users live isn’t for KYC compliance purposes alone. It helps keep the platforms safe and trustworthy so customers keep coming back. Address verification can help in these cases.
Booking.com had a problem. To ensure properties listed on their site weren’t scammers phishing for credit cards, they had to physically verify each address—no small task for a site with more than 1.3 million listings in over 280 countries. And traveling across the globe, driving hours through ice and snow, just to verify an address that might be fake? Not fun.
Lob made this headache disappear by automating everything. Lob's automation meant verification mail went out instantly instead of in batches. By streamlining the process and slashing wasted time, Booking.com optimized its mailing system to run without a hitch.
But the best part, for Booking.com, wasn’t all the time and money saved. “Actual bookers ending up at fake places dropped like a stone, and the number of fake properties going live dropped by 96-97 percent,” explained Sagar Achanta. “That’s the real win.”
“Actual bookers ending up at fake places dropped like a stone, and the number of fake properties going live dropped by 96-97%.”
In e-commerce, an address verification service (AVS) helps maintain our business integrity and keeps our customers safe by validating the provided billing address at checkout against the bank’s records. This verification aims to ensure that the authorized cardholder initiated the purchase.
In this case, the service only validates the address’ numerical details, like the house number and zip code. Then, depending on the message returned at the end of the processing (typically taking less than five seconds), the transaction either continues or is declined.
We can also use address verification to restrict our deliveries to a residential or commercial address, so we ensure deliveries go to the type of entity we expect.
2. Determine customers are within the local service availability area
Most service businesses, like plumbers and cleaners, have a specified geographic area that they primarily serve.
A plumber doesn’t want to travel one hundred miles to fix a leaky faucet unless the customer is willing to pay a premium for their service. If the plumber’s website features a service booking function, it needs address verification to prevent bookings outside their preferred availability area and ensure all appointments are local.
An efficient way to ensure local appointments is to deduce the geolocation information (longitude and latitude) from the client’s site address. Then, determine if the address falls within the desired area. However, a geocode is only as accurate as the address that the client provides. Suppose there is a zip code error, missing information like a building number, or an invalid address. In that case, the plumber will likely get a geocode that is unreliable or downright useless.
To avoid these pitfalls, Lob’s Address Verification API first standardizes, parses, and validates the provided address to ensure the location is accurate to the rooftop level. After this, it returns the respective geocode, Residential Delivery Indicator (RDI), and Delivery Point Validation (DPV) as metadata. The geocode acts as a unique identifier for the building that bears the address, the RDI specifies whether the building is business or residential, and the DPV validates that the address can receive deliveries.
What can we do with this validation? It improves accuracy as we define the availability area and automatically exclude addresses outside it.
Plus, with just the provided address, the plumber can ensure their safety by confirming that they are, indeed, going to a legitimately-inhabited location. The plumber can also get a travel distance estimate and rooftop-precise direction via the most efficient route to the worksite, even if they are entirely unfamiliar with that territory.
3. Keep databases clean
Address verification can also keep our databases clean by eliminating false or invalid records. Regularly cleaning our database improves the overall quality of our customer data.
Data informs critical business decisions. Consequently, the quality of our data directly impacts the viability of these decisions.
Let’s say an online marketplace wants to make decisions around its existing warehousing and delivery strategy. It helps to know how its customers are geographically distributed. Using a customer database full of invalid records provides little help here.
The best practice would be to validate address data as the user supplies it. However, it’s still necessary to bulk clean an address database from time to time to purge addresses that have become invalid. For example, a building might be repurposed and become unoccupied.
Bulk verification solutions can speedily parse and standardize poorly formatted addresses in our database before validation. This solution ensures a clean address database that conforms to established formatting standards.
4. Ensure localization
Verifying a user’s address is a sure-fire way to know we’re serving them the properly localized material relevant to their location.
Businesses operating across a wide geographical area often customize products, services, and informational materials according to the customer’s location. While companies commonly use IP addresses to filter users by location to serve localized solutions or material, IP addresses are only accurate to the city or zip code level. VPNs can also mask the actual IP addresses. Even without VPNs, people move all the time, so IP addresses can be unreliable location indicators.
When our target audience includes registered users with valid addresses in our database, we have a tool to offer even better precision. Valid addresses provide a narrower and more consistent location filter to ensure we serve a suitable solution or materials.
5. Collect customer metrics
We can also use address information to collect customer metrics relating to their demographic and geographical area.
Data’s primary purpose is to provide useful information. A database full of invalid addresses falls short of this expectation. In contrast, a clean database enables us to extract other information like our market’s demographic and geographic distribution. It also enables us to pinpoint lookalike demographics and areas we can target to expand our offerings.
For instance, if most of our customers live on campus, knowing that provides crucial metrics about our market demographics and customer preferences. This information could, in turn, inform our product development efforts or show us where to build a new storefront.
6. Increase checkout cart conversion
Forms can be daunting to complete. Studies show that 18 percent of customers abandon their carts because the checkout process is too long and complicated.
The best address verification solutions provide intelligent autocomplete. This feature predicts the customer’s address using the information they have already supplied, filling in address details to save the customer that effort. To go a step further, address services can automatically fill in some input fields by deducing location information from the customer’s IP address.
Automatically completing these fields can slash the amount of information a customer needs to enter. The quicker they make it through our form, the more likely they will complete their purchase. A large e-commerce site could improve its conversion rate by more than 35 percent just from a better checkout design, including fewer empty fields.
7. Improve customer experience and reduce return-to-sender
Real-time address verification can also improve our customer’s experience and reduce the chance our packages or marketing materials will be returned to the sender.
An address may be invalid or undeliverable if it isn’t registered in the region’s official mailing address database, there is a spelling or formatting error, the building is unoccupied, important information like an apartment number is missing, or if the address isn’t real. Returned deliveries can add up to a significant business expense at up to US$25 apiece.
An address verification tool can help prevent this situation by parsing, standardizing, and verifying customer-supplied addresses in real-time. This way, every address that makes it to the database is guaranteed to be deliverable.
Address verification plays a crucial role across a wide range of industries. Using address verification in an enterprise app or website can help foster trust in businesses, inform business decisions, facilitate crucial business processes, and enable efficient service delivery.
A bulk verification strategy can help clean your database. Bulk verification reveals invalid addresses, so you don’t send them mail. It also correctly formats otherwise valid addresses to improve your database quality and ensure you can successfully deliver mail and packages. Lob’s tools can efficiently clean addresses in your database.
Want to experience exactly how a clean address database and improved customer experience will positively impact your business? Try Lob’s Address Verification APIs for yourself.