Mobile phones can provide valuable insights into the individuals who own them. Organizations can leverage phone numbers to uncover or deduce multiple signals related to identity and risk. Having the customer’s contact details is crucial to exchanging information and a vital part of Know Your Customer (KYC) measures.
To maintain the highest accuracy, every piece of the customer’s data must be double-checked. It’s highly irresponsible to receive the data and simply call it a day – it must also be reliably verified. As a result, phone verification does exactly that. It provides an additional layer of protection. And that’s how the concept of knowing your customer extends beyond obtaining their personal information and legal entity.
What is Phone Verification?
Phone verification is used in many industries to confirm that the number provided by the client is valid and available. It can also serve as an additional way to verify the client’s identity (for example, Google’s two-step verification method when signing into the account using a different device than usual).
In essence, the phone verification process assesses a user’s phone number, which is validated throughout the customer lifecycle, starting the account creation stage and going later in the customer lifecycle as a reverification measure for ongoing due diligence. For regulated industries, such security processes are mandatory.
Phone number verification also plays a crucial role in confirming ownership. Here’s why:
- It assesses additional phone-related attributes and helps you to make informed decisions about the appropriate course of action, considering the risk associated with a particular phone number.
- It helps ensure account security confirming that no fraudulent phone numbers (such as those that were previously used for scam purposes) are approved. This reduces account takeovers or multi-accounting.
Why Using Phone Verification Software is Important
There’s hardly anything novel about it – phone verification has been used for years. Although understandable, it’s quite a problem for companies relying on their clients’ phone numbers to deliver crucial information, including newsletters and, yes, marketing new products. If the number is not valid, the information never reaches the customer, which is a waste of valuable time and resources for the organization.
Phone verification identifies:
- The phone number’s risk level.
- Ownership or association of a phone number with a specific customer.
- Whether the individual actually possesses the phone number during the verification process.
Additionally, verifying the phone number of the customer is vital when fighting fraud. It shouldn’t come as a surprise to anyone that fraudsters rarely use their real contact information. And even if the phone number is valid and available, certain factors can help determine the risk associated with it. iDenfy’s solution was designed to take these and other issues into account.
How Does Phone Verification Work?
The process itself is relatively simple. Whenever the company needs to verify the client’s phone number, it will send them a one-time password (OTP) via short message or “text to speech” message if SMS is not possible. The person will then need to type out the password in the required field.
Phone verification can be adapted for a variety of scenarios. For example, a company may use it as an additional fraud prevention tool after a failed deep phone check or integrate the solution as part of the secure onboarding process.
iDenfy’s Phone Verification solution offers:
- Global coverage
- Mobile & Landline support
- Unique OTP in a matter of seconds
- Automated onboarding
- Two-factor authentication regulatory security
In addition to phone number verification, the solution is also risk-score-adapted. The phone verification software scans multiple data points of the phone number and calculates a reliable risk score associated with the number.
Risk Factors Affecting the Phone Verification Process
Various factors related to the user’s device or behavior can impact the phone verification process, including:
- The creation date of the phone number.
- Checking if the number is listed on blocklists.
- Assessing if the area code matches the person’s current or past address.
- Confirming whether the SIM card was recently changed to a new phone.
- Verifying if the phone number was recently switched to a new phone with a different carrier.
- Other suspicious factors such as if multiple people are linked to the same phone number.
Depending on the company’s needs and operating industry, they may choose to integrate phone verification and additional KYC verification methods, such as selfie verification or manual review for high-risk customers. Extra checks, such as address verification, are vital in industries like crypto, where the user’s address needs to be confirmed before onboarding them.
So, combining the phone verification process with other KYC methods is a great way to build a multi-layer approach to KYC verification. This helps mitigate risks and maintain accurate KYC profiles.
Related: Customer Risk Assessment: How to Do it Right [Step-By-Step Guide]
What Makes Phone Verification an Effective Tool for Better Risk Management?
Phone verification helps decide what further actions to take. It’s also a helpful tool to recognize fraud patterns at an early stage. Here’s how it works.
A quick API call analyzes the number and delivers the key information about a number, such as:
- Risk score (from low to high)
- Country of origin
- Original network
- Current network
- Roaming status
- Roaming country (if roaming is on)
- Roaming network name
- Availability (reachable or not)
- Validity
- Current route
More often than not, high risk will be associated with the current network being different from the original one, roaming being on, country of origin differing from that of the client, etc.
Phone number risk score can be influenced by a range of signals, including:
- The creation date.
- Inclusion in blocklists.
- Recent changes of the phone number to a different device or carrier.
- Multiple individuals or accounts associated with the same phone number.
Keep in mind that while a high score resulting from the phone verification check does not automatically indicate the presence of a fraudster, it does significantly increase the probability. Consequently, it’s vital to exercise greater caution and attentiveness when dealing with such customers.
Why do Users Provide Fake Numbers During the Verification Process?
There are many methods to bypass the classical solutions that have been present in the industries for many years. For example, one can easily find a fake phone number on the internet and use it instead of the real one. A person may turn to his family or friends and provide their phone number as a substitute. Additionally, many websites offer a temporary phone number service that a person may use to receive a one-time password.
Finally, users frequently try to add fake phone numbers during verification processes to avoid receiving excessive promotional and marketing content, as well as vouchers. That’s why the abundance of promotional messages can often be burdensome for customers, particularly when they have no interest in purchasing a specific product.
What are the Benefits of Phone Verification?
If you wish to comply with the regulations effectively as well as ensure higher security and transparency between the company and its customers.
So, verifying the phone number of your clients is essential because:
- Phone verification contributes to a deeper understanding of customers by enriching the existing information gathered, thereby providing a more comprehensive perspective on their identity and associated risk factors.
- Phone verification not only confirms the authenticity of a customer’s phone number but also enhances future communications, such as targeted marketing outreach and timely payment reminders.
- Phone verification is a user-friendly authentication option, providing minimum friction and resulting in an efficient customer onboarding process.
Any business that wants to verify the identity of its users properly can benefit from incorporating phone verification into its onboarding process. Phone verification is also particularly beneficial for businesses that directly depend on phone usage, such as delivery services, transportation services, payment platforms, or other app-based marketplaces.
Automated Tools to Pair with Phone Verification Software
Using a reliable phone verification solution will allow companies to feel more assured that the phone number provided belongs to the person. The organizations will no longer be concerned that the information transmitted may not reach its destination – the client’s phone. The solution is excellent for organizations valuing their time and resources.
Additionally, the integrated fraud scoring tool is a valuable asset to any company that wishes to protect itself against fraud more effectively. In an age where digital services have become the new norm, fraudsters take advantage of any security gaps present in the system. It is then up to the institutions to implement the safeguards to battle the fraudsters and their devious methods. A good rule of thumb is to do more than is required by the regulations. More often than not, adhering to the bare minimum requirements puts the company at a much greater risk of being targeted by fraud.
Luckily, companies rarely have to develop their own products, and phone verification is no different. The tools are already here, and one simply has to choose one that fits their needs best. We believe that iDenfy’s solution has it all and more.
Feel free to contact us if you’d like to get a hands-on experience of our verification solutions.
This blog post was updated on the 9th of January, 2025, to reflect the latest insights.
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