Data Enrichment & Validation

How to Detect and Prevent Postal Address Fraud in 2021 [The Complete Guide]

September 2, 2021
Inkit Team

When it comes to scamming, the sky's the limit for con artist’s imagination. And postal address fraud has become a major issue for companies. In recent years, US citizens have been losing unprecedented amounts due to cybercrime. In 2020, losses reached 4.2 billion dollars, with a 700 million increase from 2019. Spambots, fake accounts, account takeover fraud, and other types of fraud make personal data vulnerable and ruin the reputation of businesses.

The quality of customer data is the foundation of a successful business. Bad data equals disaster, from poor business operations to low revenue. Early detection and continuous monitoring for compromised credentials is crucial.

Fake sign-ups when users provide fraudulent postal addresses and other details are also a huge threat. False information facilitates fraud and decreases the efficiency of business processes. An organization ends up with a database of nonexistent addresses it cannot use. Since it also cannot verify customers’ identities because of missing data, the risk of cybercrime also skyrockets. That’s why it’s important to fight against fake sign-ups with postal addresses.

So what is account fraud? How can fraudulent postal addresses ruin a company’s bottom line? Most importantly: What can you do to prevent it?

In this in-depth guide, we’ll see what account fraud looks like, why it happens, and what kind of systems you should deploy to protect yourself.

Let’s dive right in!

What Are Fraudulent Postal Addresses?

Digital fraud can take many shapes. What is account fraud?

Account fraud is when an abuser opens a fraudulent account, takes over an existing account, or completes an authorized payment using stolen credentials. E-commerce companies, for example, are familiar with retail return fraud, while financial organizations have to deal with identity theft cases, money laundering, or payment fraud attempts. After all, postal addresses are used for KYC verification checks, utility bills validation, and contribute to compliance with major laws and regulations.

In fact, it could be a bank, credit card, e-commerce, or any other account that allows fraudsters to access personal information and use it to obtain money. To commit account fraud, abusers either provide inaccurate information, including postal addresses, or steal PII from real people. The result can be devastating to the organization’s reputation and bring considerable financial losses.

Fraudulent Postal Addresses

Although data breach and account fraud can take many forms, the following types of fraud happen the most often.

  • Account takeover fraud. This type of fraud happens when a fraudster gets control over an account that belongs to someone else. Phishing, malicious code, man-in-the-browser malware, or hijacking are most commonly used for account takeovers.
  • Account opening fraud. This type of fraud happens when a fraudster uses stolen information from the Dark Web to create accounts in other people’s names.
  • Payment fraud. This type of fraud happens when a fraudster makes a payment from a compromised account or uses social engineering against a fraud victim.

To complete identity verification and make fraudulent payments after accessing an account, attackers need to provide personal information. They have to sign up and then share a business or billing address. Even though physical address fraud doesn’t get as much attention as emails, it’s a great vulnerability.

One of the best things that a company can do to protect itself from a fake sign-up is to detect it as soon as possible. And verification software can ensure that the address that is being entered into your system is correct, free from errors, and exists.

Four Ways Fraudulent Postal Addresses Can Harm Your Business

How can the different forms of address frauds affect a company’s bottom line? Let’s find out how fraudulent postal addresses impact your business growth.

  • Reputation risk. Reputational damages can have a significant impact on a company’s bottom line. Being associated with address fraud can be hurtful to a company’s reputation in the long term.
  • Lost sales opportunities. If there are a number of fraudulent postal addresses in your database, then the cost of lost sales opportunities multiplies considerably. This can cost you a lot of business.
  • Loss of resources. All the money, resources, and time that goes into processing these fraudulent postal addresses go in vain for no reason.  By storing only accurate addresses in your databases, you will eliminate wasted communications. This will help your company to save on postage and printing and eliminate address correction penalties.
  • Legal fees. Recovering money from fraudsters is not an easy process. It will require expensive legal aid after a lengthy investigation.

However, you can prevent all of these risks with the right address verification tool.

Start verifying addresses today
Don't waste time and money dealing with lost shipments that never made it to your customers.
Start for free

Users Signing Up with Fraudulent Postal Addresses: What Can You Do?

Having a database of up-to-date, clean addresses is critical for any company, and fraudulent postal addresses are a challenge that causes a severe strain on businesses.

When information isn’t checked at the entry stage, it affects all future operations. To rectify this, companies will have to spend time calling up each customer to check the data. But companies are usually short on resources.

Here, address verification comes into the picture.

You may think maintaining a high-quality database and having precise customer details will take time. However, an efficient address verification solution should automatically verify and standardize addresses.

Postal address verification helps to serve legitimate customers, removes risks, and ensures a more efficient operation.

Collecting accurate address data during sign-up/payment reduces failed deliveries, increases on-time delivery rates, and negates the need to clean the data post-collection.

How Does Postal Address Verification Work?

Verification operates as follows: a postal address verification tool checks all addresses and matches them with the details available in the official postal service provider’s data to find out if an address is valid or not. If the address matches an address in the authoritative database, it means that it is “verified”. If there is no match, the address is marked as invalid.

The key to powerful fraud prevention is to access as much customer data as possible. To make sure that your data is always ready for use and clean, you should always check it at the point of entry. This will provide accurate data for all your systems such as CMS, website, call center, or any other database. The key points where you want to gather user data are:

  • Onboarding, when your users sign up,
  • Login, when users enter their credentials,
  • Transaction, when a user makes a purchase,
  • Other on-site activities, like deposit or withdrawal.

Using real-time address verification tools can help to capture customer data upfront and ensure its accuracy. Address verification API verifies address at the point of collection so that no inaccurate data enters your database. It performs a comprehensive fraud validation and blocks malicious fraudsters.

Postal Address Verification

Four Key Benefits of a Fraud Detection API

Organizations lose tens of billions of dollars to online fraud. If you want to protect your business from fraud, you can use fraud detection APIs. What makes fraud prevention API better than other solutions?

  • Efficiency. Developers don’t have to create a fraud detection application from scratch. There is no need to reinvent the wheel.
  • Scaling. It’s impossible to manually process a lot of data in real-time. This is not a very viable operation mode. APIs speed up the process and make it possible to work with thousands of simultaneous transactions, logins, or sign-ups.
  • Automation. Once the APIs are integrated, all the data is processed automatically.
  • Personalization. Not every business needs to focus on the same data points. APIs will let you build tools that make sense for your business.

Fraud detection API can help you to onboard more legitimate users to gain traction and grow your business with complete peace of mind.

Why Is Postal Address Verification Essential for Your Business?

Integrating such address verification technology into your business systems will save time and money. Organizations that regularly analyze their customer database can see significant business outcomes. A postal address verification tool ensures that addresses are current and accurate. With this technology, you can check the postal addresses at scale at the point of entry within seconds. It will ensure that the data entering into your system is correct and your user accounts are valid while also facilitating the KYC (Know Your Customer) verification or HIPAA compliance processes for you.

Inkit Verify for Shipping Address Validation

Maintaining an accurate mailing list can have a tremendous impact on the efficiency and growth of your business. It’s crucial to verify data and never save un-checked and invalidated addresses in your company’s database.

Inkit can protect your company from bad signups. Inkit Verify instantly separates fake registrations from real users and stops fraudulent accounts in their tracks.

Inkit Verify integrates easily into your technical environment. This means no interruption in how your customers experience their checkouts or account sign-ups while having verified addresses flow into your database. With an automated system in place, you can avoid almost all manual tasks.

It will also reassure your customers that you are committed to cutting your delivery miles by guiding drivers to the correct address. The first time, every time.  

Inkit Verify makes sure address data is accurate so that every package gets delivered and every customer is happy. And happy customers mean better brand reputation, greater return on investment, and repeat business.

Learn more about validating addresses by working with Inkit. Contact us today or get started with a free trial.

Start verifying addresses today
Don't waste time and money dealing with lost shipments that never made it to your customers.
Start for free