An IP address can tell companies a lot about Internet users, including their physical location and the device used to connect to the web. But it rarely reveals whether they’re fraudsters. To prevent chargebacks and other types of malicious behavior, businesses should use a variety of fraud detection tools that analyze multiple data points linked to each transaction. One valuable tool is an IP address fraud score, which provides a predictive risk assessment for each unique IP.
Fraudsters IP address fraud score behind breadcrumbs in their wake, and each of those breadcrumbs can help businesses detect suspicious activity. For example, if a customer has made several rapid-fire purchases with the same card and from different accounts, that can be an indicator of fraud. Paypal, Stripe and other payments processors track this information to identify suspicious activity.
However, fraudsters are constantly evolving their strategies to evade detection. For instance, a common technique is to spoof their IP address by connecting to a cloud infrastructure or residential virtual private network (VPN). This can make it difficult for organizations to track their activity and identify any potential threats.
Understanding IP Address Fraud Scores: Evaluating Risk in Online Transactions
To combat these challenges, organizations should consider integrating an IP fraud score into their existing fraud prevention strategy. These scores minimize the risk of threat actors entering their websites by evaluating an IP address against various settings and risks, such as proxy, VPN, emulator and more. For example, an IP address associated with a public library could be a red flag since it can indicate that the user is seeking anonymity.