We would really like to see UPS street level address validation. It continually cost us $ when addresses are not validated.
Address verification is a big deal because the cost of returns and undelivered mail is not just the cost of postage. It's much higher than that. It is lost revenues if you are sending out invoices. It is lost revenues from unhappy customers who may have typed their address in "incorrectly". At that point, blaming them for getting their address wrong is not an option. As a merchant, you just want to take care of your customer. With address verification, you can either do it at the point of entry (right when they enter their address) or after the fact with a List Scrubbing service. There are quite a few address verification services online. Some offer just the list scrubbing, others offer an address verification API for live address verification or both.
The USPS offers free access but it is somewhat limited in the data that it returns. It doesn't return the DPV (Delivery Point Verification) or perform CASS certification.
UPS and FEDEX both offer a free service as well but they require that you the service only be used for preparing shipments on their network.
So, if you need live address verification, you'll want an API. If you need batch processing, you'll want list scrubbing services. Shop around and see which company is going to offer you the best service for the price.
I work for an address verification company called SmartyStreets. (http://www.smartystreets.com)