Scanning IP addresses to prevent fraud for businessesSecurity Affairs

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How can businesses protect themselves from fraudulent activity by reviewing IP addresses?

The police would follow the burglars if they left business cards in the properties attacked. Internet fraudsters typically leave a breadcrumb trail whenever they visit websites through specific IP addresses. They reveal their physical location and the device they used to connect to the web.

While online scammers take precautions to hide their real IP addresses, merchants can gain valuable insight into their intentions by carefully analyzing the accessible information. How can businesses protect themselves from fraudulent activity by reviewing IP addresses?

IP addresses and fraud prevention

Due to the uniqueness of IP addresses, the host on a network will always be able to know which is which. Since ISPs know the IP addresses assigned to each of their customers at all times, these can help track the online activity of scammers. To ensure that they are not detected, the first step for fraudsters is to hide their real IP addresses.

You can use IP addresses to track the identities of cybercriminals. However, the purpose of IP address analysis for merchants is not to force the police to break down the door and arrest those caught in the fraud. Instead, they can use this information as part of a risk score model. This way, merchants can better detect fraudulent activity and decide whether or not to block potentially dangerous transactions.

How do cybercriminals hide behind IP addresses?

In recent years, users have seen the disturbing results of surveillance technologies, hyper-personalization and big data. They often reacted negatively, making online privacy a big concern. The number of virtual private network services and public proxy servers has increased. As a result, the number of people using these technologies to camouflage themselves online has increased, whether they are regular internet users or people looking to scam others.

Websites only see the proxy’s IP address, not the user’s. Trackers struggle to uniquely identify fraudsters across multiple domains. Of course, Internet scammers often use proxy servers and virtual private networks (VPNs) to hide their IP addresses. They can use a cafe or library for free Wi-Fi. The Onion Router (Tor) is another option for scammers. The relay network conceals the user’s IP address and online behavior.

Internet fraudsters also commonly use hacked routers or hosting services as launching pads for assaults or joint operations. Here they build ad-hoc VPNs by swapping residential IP addresses.

How can a user’s IP address help detect fraud?

It is very easy to detect which organizations are responsible for distributing addresses. If you have an IP address, you can easily check if it belongs to a private network, a proxy server or a public server. IP addresses often point to well-known residential ISPs.

But someone attempting anonymity can use an address connected to the Tor network or a Starbucks. Although there is not enough evidence to show that the user is a fraudster, it is a red flag that warrants further investigation.

The first step in analyze an IP address is to locate its owner and investigate further to learn more about the context of this address. This study may include the location of the owner, the type of network they operate, and any history of user fraud.

IP address analysis with a fraud protection plan

Merchants who have taken significant steps to reduce fraud and chargebacks will often use an anti-fraud system. This approach uses risk scoring to determine whether to hold, accept or reject trades pending human review. The easiest way to take advantage of IP address analysis is to include it in an overall risk assessment of the transaction. Just looking at the IP address is not enough to know everything about your buyer. By reviewing a fraud history, you can better understand the risk of fraud associated with that particular person.

User behavior, device details, and transaction speed are factors to consider. For risk assessment, non-anonymized IP addresses are useful because they often reveal the user’s physical location. Merchant fraud rates in different locations also affect the rating system.

Due to the dynamic nature of IP address assignment by most ISPs, it is very rare for many residential customers to share the same IP address on a single day. Blocklists should include measures to allow residential IP blocks to expire once sufficient time has elapsed. Also, remember that you shouldn’t just block all dubious IP addresses. While customers can use professional VPN services and other anonymizers to buy and hide their identity, it’s worth mentioning that this can give you fake data that won’t be too useful for marketing research.

How verifying an IP address helps reduce fraud

The quality of data used in fraud prevention and the success of that prevention have a direct correlation. Despite the wide range of implementations, the data reveals a wealth of information about the habits and location of scammers. Blocking connections from an IP address detected in fraudulent activity is a simple but effective way to stop fraud.

Using consortium data is another way to check IP addresses. Bringing different independent parties together is a classic method of combating fraud. Businesses can freely and securely share data through appropriate procedures and agreements, effectively protecting the privacy of their consumers. Verifying the IP address is a great first step in preventing fraud, but other steps are necessary.

Last words

If an IP address can reveal a lot about an Internet user, it rarely indicates whether or not they are fraudsters. While useful, the information from an IP address scan does not provide the complete picture. When trying to piece together a suspicious client’s provenance or purposes, you need to assess IP address data and background. You want to see if any identifiable trends are emerging regarding the origins of your fraud and disputes. Whether you seek help from experienced specialists or do it independently, it does not matter. You can understand how to eliminate chargebacks by analyzing the causes.

Although there are ways to protect privacy online, networked computers do not adequately hide their identity. Each linked host device has an assigned IP address to identify and connect with other devices on the network. The IPRoyal website Where marsproxies.com are great sources for related information!

About the Author: Anas Baig

Passionate about working on disruptive products, Anas Baig Currently works as a Product Manager in the Silicon Valley based company – Securiti.ai. He holds a degree in Computer Science from the University of Iqra and specializes in Information Security and Data Privacy.

Follow me on Twitter: @securityaffairs and Facebook

Pierluigi Paganini

(Security cases hacking, fraud)



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