Since the pandemic struck, people changed the ways they shop and shifted to e-stores. This led to tremendous growth in e-commerce sales of around $4.9 trillion. However, with all these financial and technological advancements, the rate of fraud attempts is also escalating. The most common types include chargebacks, failed deliveries, incorrect address entries, and more.
Consequently, these abruptions are making effective address verification a must-have for e-commerce platforms. In order to minimize the chances of failed deliveries and chargebacks, online stores need to incorporate AI-powered address verification systems. This is because they provide accuracy and validates the whereabouts of customers by analyzing the geolocation. The blog provides insights into what chargebacks are and how online address verification helps prevent them.
A Brief Introduction to Incorrect Addresses and Chargeback Fraud
Chargeback fraud occurs due to two main reasons: inaccurate entry of an address or willingly providing fake information. As per Shufti Pro News, fraudsters often use the ladder to escape verification checks. In the case of manual entry and validation, there are more chances of discrepancies and clerical mistakes. In order to address this issue, e-commerce platforms require robust solutions to validate the address of the customer placing an online order.
Chargeback refers to the mechanism that helps e-stores to save customers the cost they might pay for reversing of purchase. Fraudsters use fake information to dodge the verification of address process which leads to chargebacks. Customers can withdraw the transaction in case of an unfamiliar or unauthorized purchase. If the cardholder’s return the amount illicitly paid so far, this is called a chargeback.
Incorrect Addresses Lead to Chargeback Fraud
Chargeback policies safeguarding the money of legit customers are also making room for fraudsters to trick the address verification process. They use an incorrect address to place an order. Upon its delivery to a fake address, the fraudster claims that they never received the package or file a complaint to the card issuer. This helps them get the chargeback.
The card issuers then reach out to the e-store, retailer, or merchant in order to bring their notice to the problem. Despite providing proof of correct delivery, e-commerce platforms can still lose hefty amounts and a lot of time. Therefore, e-commerce platforms require robust solutions to verify addresses prior to dispatching the package. The online verifying address solutions provide e-stores with such services to accurately locate the customers and validate the information they provide by accessing their exact location.
Online Address Verification – Helping E-Commerce Platforms Combat Chargeback Fraud
Fraudsters often use fake addresses and payment methods to make a purchase from online stores. They keep it in possession for a month or two and then file a claim for chargeback stating they didn’t receive it. As e-stores have been using manual ways to validate address which further increase the chances of chargeback.
Therefore, e-commerce platforms require online verification of address solutions to make sure the customers are present where they are claiming to be. Furthermore, address verification is a regulatory obligation put forth in the KYC/AML standards. As per the guidelines, e-stores should verify customers and their geolocation prior to assisting them. The AI-powered solutions help e-commerce platforms in the following ways:
Machine Learning (ML) Technology for Effective Address Validation
Online address verification systems now come with advanced technologies like Artificial Intelligence (AI), Machine Learning (ML), and computer vision. They are capable of self-learning, automating the address verification process, and providing instant results. While making a purchase online, the system asks the customers to fill in their information along with supporting documents. Such as utility bills, rental or ownership agreements, and credit/debit card bills.
Shufti Pro Funding indicates that the ML-driven system then analyzes and validates the information. With its access to global databases and maps, AI-powered address verification solutions provide accurate results regarding customers’ whereabouts. It further involves the following:
- Address Validation
The system efficiently extracts the required information through OCR from the documents provided by the customers. It then cross-verifies the address with the one attained by analyzing the customer’s real-time location.
- Address Cross-Verification
Next on, the system validates the claim of the customer while verifying an address. This provides proof of whether the address exists or not. Moreover, the online address verification solutions cross-verify the information within global databases. This way, e-commerce platforms can prevent chargeback fraud in the case of international shipping. https://propernewstime.com/
In the End
Most of the chargeback is due to failed deliveries that occur when customers provide an inaccurate address. Fraudsters also use fake addresses to claim illegitimate chargebacks. This not only costs e-commerce platforms hefty financial losses but also brings reputational damages. Therefore, e-stores need to employ an efficient mechanism to validate address and prevent chargeback costs. The AI-powered address verify solutions provide robust services to e-commerce platforms. They seamlessly validate the customers’ information while helping e-stores to build better B2C relationships.
