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Let’s say I have a form. Instead of letting users sign up and go into a db could I make a users data create and go into a user custom post type via api call on form submit?
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Yes, you can do it with Gravity Forms or custom forms. Please mind security, particularly nonces and escaping. Don’t get hacked.
Just have a normal form, and put the user info as fields. Put the form on a public page. There’s no need to create a custom post time for that.