Verifying Proof of Residency Safely and Accurately with Utility Bills

For forever, utility bills have been the foundation to verify a customer’s residency. The reason is that utility bills contain a name, an address, and a date. Combining all this information and using them to verify a person’s proof of residency is much easier than using other documents. Utility bills also help ensure that a person has been paying their utility bills at a particular location.

There has been a debate that using a driver’s license is more authoritative, more secure for address verification than utility bills. However, a driver’s license can’t be used as the only document as residency proof as not everyone has a driver’s license. Plus, the details available on a driver’s license can be outdated. The address listed on the license is where the holder lived when they applied for the driver’s license. What if someone moved since they applied for their driver’s license? This leads to access to inaccurate information. Bad actors can also forge driver’s licenses and take part in fraud such as identity theft and money laundering. Compared to driver’s licenses, utility bills can offer much accurate information of where a person lives, and their permanent address.

What’s the Need for Verifying Proof of Address?

Since the wave of digital transformation, online financial fraud has seen a hike. One of the primary reasons for that is the lack of proper customer verification. With the latest technologies, fraudsters try to forge documents and access a bank’s/financial institution systems. This is why firms must verify customers before providing them access to the services.

Offering digital services while verifying customer identities in a traditional (manual) manner seemed counterproductive. And improper online customer verification procedures aided the fraudsters in their quest for fraud. Many customer verification methods came into existence, all of them relied on verifying customer documents.

Verification of customer documents during the onboarding process provided a better insight into the customer risk profile and history. Some common documents that are verified around the globe every day to assess the risk level of a potential customer/client are:

• Bank statements (to get an understanding of the customer’s transaction history)
• Credit card statements (usually verified during loan applications to understand financial health)
• Government-issued photo ID document (to ensure a customer is actually who they claim to be)

Even after verifying these documents, fraud kept on rising. Thus, proof of address verification became an industry-standard before signing on to a new customer/client. Proof of address verification or proof of residency helped firms verify where the customer lives. Being able to tie a person to a physical location meant accountability for any kind of fraud. As mentioned, Driver’s license and other address-related documents had limitations, that’s why utility bills became the gold standard for verifying residency.

Challenges with Verifying Address Using Utility Bills

Although utility bills are better than any other document type to verify proof of residency, firms still faced some challenges. As there are little to no security measures in place to send and receive utility bills, they are pretty easy to counterfeit. Fraudsters globally utilize the latest technologies to doctor documents that are indistinguishable from the original documents.

Apart from the issue of forgery, utility bills were tough to acquire. A lot of people tend to be paperless and get their utility bills electronically. Sending digital utility bills for proof of residency increases the risk of fraud as there are little to no methods for verifying the authenticity of a document. Some people have to reach out to their service providers and ask for a physical copy of the utility bills. This leads to increased friction and poor customer experience during onboarding.

Homeowners or tenants are asked to provide identity documents (government-issued photo ID document) in person to get city-funded utility services like water. Private companies on the other hand (gas, electricity, cable, internet) have the bandwidth and technology to secure monthly bills so they can’t be forged or tampered with. However, most companies don’t even implement secure ID verification methods, multi-factor authentication methods, and other cybersecurity precautions to mitigate the risk of identity theft.

According to reports from industry experts, editing and forging a fake utility bill is easy. Even amateur fraudsters can utilize a variety of technology to turn the tides in their favor. Doctored utility bills can be so well made that it’s hard to identify between the original and fake ones. If a firm is relying on manual verification of documents, only 1 out of 10 doctored documents will be caught.

Utility Bills and Proof of Address Fraud 

Forging utility bills and using them as proof of residence is illegal. Unfortunately, the use of fake utility bills goes beyond just signing up for new services. Fraudsters often forge addresses and utility bills to steal identities.

To securely verify paper and digital utility bills, firms should rely on verifying residency using encrypted utility data. Companies must achieve this goal without succumbing to constant attacks from fraudsters. This reduces the chances of hackers gaining access to the internal systems of a firm.

DIRO provides secure, seamless, and 100% verifiable online document verification. The API can be easily integrated with the website, reducing friction and improving customer experience during onboarding. By using DIRO’s online document verification, firms can verify utility bills in an instant, verified documents are provided with 100% proof of authenticity backed by verifiable credentials. DIRO can capture 100% of forged and doctored documents, thus eliminating the use of stolen and forged documents.