Combating Fraud with Customer Data Validation

Fraud is nothing new in business – in fact, the earliest recorded example of it goes back to 300 BC in ancient Greece. What is different today, however, is the scale and growth rate of it, particularly since the dawn of the e-commerce era. Between 2016 and 2020, the per-dollar cost of fraud to businesses grew by over 40%, and according to a 2022 PwC survey, over half of businesses have experienced a fraud incident in the past two years – the highest level in recent history. Today, business losses due to e-commerce fraud are projected to exceed US $48 billion globally in 2023.

Although business fraud poses substantial challenges, it is crucial to acknowledge that many instances are preventable. Service Objects’ integrated Customer Data Validation approach is specifically engineered to ensure that you are working with real customers, highlighting quality customers while flagging low quality and fraudulent ones. In this article, we will examine how you can leverage Customer Data Validation to protect your organization from the most prevalent forms of business fraud.

A real problem that starts with fake contacts

Business fraud takes many forms nowadays, including bogus orders, fraudulent payments, deliveries to freight forwarders or high-risk countries and more. Fraudulent transactions may appear out of the blue or be carefully groomed over time with uneventful smaller orders to build trust. In either case, the result is a shipment or transfer of funds that will never be paid for.

Another persistent form of fraud involves bogus marketing leads who sign up just for the sake of receiving free lead marketing giveaways, with no intention of even purchasing anything, often with fake names or contact information. In this case, people are “stealing” your time and resources, progressively reducing the marketing effectiveness and ROI of your contact database into the future.

One thing these scams all have in common is fake or risky contact information – because fraudsters have no desire to be real, identifiable people who could get caught. This means that one of your most important safeguards against business fraud is to have an automated process to validate whether your customer contacts are accurate and genuine before they ever reach your contact database, at each of your data entry touch points.

How Customer Data Validation can help

Customer Data Validation is an integrated, automated four-tiered approach that helps you flag and review potential fraud at the point of data entry.

By combining an integrity check of individual contact elements, augmenting and extending data where needed, and cross-connecting interrelationships between data elements, you receive quantitative and qualitative quality signals that allow you to flag suspicious customers and prospects for further review or rejection.

One key tool for accomplishing this is Service Objects’ flagship DOTS Lead Validation service. This product brings together each of the core components of Customer Data Validation for your incoming lead, customer and shipment contacts, using hundreds of authoritative data sources, including:

  • Validation of key customer elements such as Name, Address, Email, Phone and IP/Device to ensure that each of these elements are valid.
  • Correcting and appending accurate data where needed.
  • Cross-checking these results against over 130 data points.


The results include actionable Certainty and Quality scores that give businesses the data to confidently know they are dealing with a real person, as well as accurate and verified customer information. These results also identify important potential indicators of fraud among accurate addresses, such as shipping destinations that are known to be freight forwarders or are in high-risk countries, to flag contacts for further review.

This service can be customized to individual business needs and can be easily integrated into web forms, ecommerce checkouts, marketing platforms and CRMs. In addition to reducing fraud, it improves the marketing ROI of your contact data, saves time and effort maintaining data hygiene and improves customer satisfaction by reducing shipping errors.

Get our free white paper

Want to learn more about how to automate your fraud prevention efforts? Download our free white paper Customer Data Validation: When Accuracy Matters, or better yet, speak with one of our friendly data quality experts for a free no-pressure consultation and product demos. Discover why we are the industry leader in contact data quality, and how we can tailor Customer Data Validation solutions to your unique business needs.