Preventing Fake Accounts with Customer Data Validation

November 1, 2023

In the digital era, the massive influx of customer data presents immense opportunities for businesses to develop deeper customer insights and improve the user experience. However, it also brings challenges, with one of the most concerning being fake and bogus accounts. Fraudulent activities, data breaches, and financial losses are only a few risks that companies face due to these bogus accounts.

Enter Customer Data Validation. In this blog post, we discuss how Customer Data Validation detects and prevents fake accounts and fraudulent customers. You are also invited to watch our recent webinar, The Power of Customer Data Validation in Preventing Fraud, where we look at some current, real-world examples of fraud and how verification services could help prevent them.

Understanding Customer Data Validation

Customer Data Validation represents one of your main lines of defense against fake accounts, by verifying, correcting and scoring customer data collected by your business.

Starting with the five core customer identity attributes; Name, Address, Phone, Email and Device, Customer Data Validation ensures that customer data is accurate, genuine and up-to-date. This process involves four main steps: Integrity Check, Augment and Extend, Cross-Connects and Checks, and Quality Signals.

The four layers of Customer Data Validation explained

Let’s take a look at each level of Customer Data Validation in more detail:

Integrity Check

Each core customer data element is verified in real-time against authoritative global data sources, ensuring that you are starting with accurate details.

Augment & Extend

Here, additional essential information is appended to the customer record. Examples include phone and address details, email health and deliverability, and location information based on IP address. These details are then used to help determine the quality of customer records.

Interconnections & Cross-Checks

Using the core customer data along with the derived data from the previous step, this third layer builds interconnections between these data points and cross-checks them for consistency.

Quality Signals

Finally, this layer identifies the overall quality and accuracy of a customer record. It flags and identifies fundamental flaws while providing numeric quality scores for each element of the customer record as well as an overall confidence score. Using custom business logic, you can automatically flag and/or weed out fraudulent and high-risk customer accounts.

The role of Customer Data Validation in preventing fake accounts

Customer Data Validation serves as a crucial front-line defense line for businesses against the risks of fake accounts. In less than a second, you can verify a customer’s name, address, phone, email address and device against hundreds of trusted and authoritative data sources, using a process that can be deployed at the point of data capture as well as run periodically against your existing contact data.

Each core data point is individually verified and corrected as well as cross-validated against other data, to ensure the accuracy and legitimacy of the customer. Below are some of the validation services that can help prevent fake accounts.

Name Validation

DOTS Name Validation parses, formats and validates names at point-of-entry, automatically organizing name data into correct fields while removing unnecessary data and flagging potentially fake names. Our detection and verification filters include the following:

Business/Consumer
Name origin
Phonetics
Syntax
Dictionary
Vulgar
Nickname
Celebrity
Bogus
Garbage

Address Validation

Incomplete or inaccurate address information can impact your business in countless ways and are one of the key indicators of a fake account. DOTS Address Validation services verify and correct addresses for 250+ countries, ensuring addresses are valid and deliverable, saving costly shipping and customer service issues.

Phone Insights

Phone numbers provide valuable clues to the accuracy and authenticity of an account. DOTS Phone Insight returns contact and carrier information based on customer phone number(s), with caller information that includes:

Name
Mailing address
Address geocoordinates
Phone type (residential, business)
Line type (wireless, landline, VOIP, Portable VOIP, etc.)
Date ported

Each data point can be used to determine the legitimacy of the customer account. They can also be used in conjunction with other data points to cross-validate.

Email Validation

Disposable and free email accounts, like Gmail, Yahoo Mail, and Outlook.com, are often used by fraudsters because they are free, easy to set up and can be used anonymously.

DOTS Email Validation performs over 50 integrity checks and filters, providing deeper insights into the risk and deliverability of each email address. In addition to detecting disposable and free email accounts, this service also provides warning flags for problematic emails such as bogus, vulgar, and screamer addresses, as well as known honeypot, spam trap and role email addresses.

IP Validation (Device)

DOTS IP Address Validation has a range of uses, from fraud mitigation to determining locations, which can be used with targeted marketing campaigns or determining sales territories.

By accessing over 4 billion IP addresses and their reputations, our global IP verification service determines visitor location, device type and proxy servers while providing a confidence score.

By cross-referencing IP address location against additional location data points, like billing and shipping addresses, you can flag high-risk and fraudulent transactions.

Bringing It All Together

The real power of customer data validation comes when you combine and verify the customer’s five key attributes against one another. Service Objects’ flagship DOTS Lead Validation service cross-validates and scores over 130 key data points, returning actionable Certainty and Quality scores that help quickly identify quality customers and prevent bad accounts from ever entering your CRM, business and marketing platforms.

Customer Data Validation is an integral component in a business’s defense against fraudulent activities, particularly the creation of fake accounts. By ensuring the authenticity and accuracy of customer data, businesses can significantly reduce their exposure to risk, comply with regulatory standards, and maintain their reputation.