When people log in to websites, send or receive emails or chat with friends on social media, they’re automatically assigned a unique set of numbers and letters that identify their Internet Protocol (IP) address. These identifying pieces of data are the key to connecting any device to the Internet, whether it’s a desktop computer, smartphone or even smart fridge. For fraudsters, however, IP addresses are a tool to remain anonymous and conceal their malicious intent.
That’s why businesses rely on IP fraud score to help them detect and block fraudulent transactions and suspicious activities before they’re processed. By analyzing a range of data points linked to an IP address—including its location, the frequency of associated transactions and whether it’s been flagged for suspicious activity—IP fraud scores provide a clear indication of how likely it is that an individual is engaging in fraud.
Fraud scoring tools can then enable businesses to automatically allow, deny or restrict website access based on the user’s risk level. This helps to protect the company from financial losses while also ensuring customers aren’t exposed to security risks or potential fraud. It’s a powerful tool that can be used to support existing fraud prevention methods, such as identity verification, device fingerprinting and behavioural analytics.
In addition to an IP’s history and connections, factors such as the device being used and the connection type—including virtual private network (VPN), emulator or proxy—are considered when calculating a score. For example, if the device being used is known to be used by fraudsters for botnets or other malicious purposes, it will receive a higher risk score. Similarly, if the connection type is residential, it will receive a lower risk score than if it were used by a data center.
The final element that is considered is the number of times the IP has been reported by other sources for abusive behaviour. If it is frequent, or if the abuse report includes a specific word or phrase, this will increase the risk score significantly.
As the amount of fraud and malicious activity continues to rise, organizations need to be ready to adapt their approach to detecting it. To do so, they need to incorporate a comprehensive approach that combines multiple technologies and tactics—including IP fraud scores, device fingerprinting, and behavioural analytics—to help them stay ahead of the bad actors.