While it's an unfortunate truth of of today's e-commerce world, it is one that cannot be ignored: Fraud is ever-present in online transactions. The expense of unnecessary shipping costs and human resources, disgruntled customers, and the time it takes to investigate disputes adds up. And the damage to a company's brand may result in untold amounts of lost sales.

Using an address verification service (or AVS) as one of the tools in your fraud management toolbox is a smart and cost-effective move.

What is AVS?

A USPS address verification system is a software-based system that compares a submitted address to an authenticated USPS address that is stored in a database. If the submitted address closely matches the authenticated address in the database, then the submitted address is deemed to be valid. If the submitted address does not closely match the address in the database, it is flagged as invalid.

Using AVS to Prevent Fraud

Using AVS data in conjunction with a customer's IP address can be a useful way to evaluate the validity of an online order. There are a number of services that can provide you the geographic location that corresponds to the IP address of the customer's computer.

When the customer submits their billing address or shipping address, the AVS will verify if those addresses are valid.

If the IP address' geographic location appears to be in reasonable proximity to the customers' AVS verified address, it could be reasonable to assume that the order is valid. If the IP address is located a considerable distance away from the AVS address, there is a possibility that the order could be fraudulent. Further verification of the validity of the customer's order could be merited.

Choosing the Right System

While an address verification service should not be the only tool used in fraud prevention, it can be a useful one. Various USPS address verification services are available for use by ecommerce sites. In addition, Smarty provides free address lookups for ecommerce sites to test their system.