When it comes to fraud detection, finding proxies is a big topic. Fraud detection begins with thinking intelligently about the IP address associated with a transaction. Where is that IP address, and how does that location relate to other transaction data? Whereas most IP addresses inspire confidence, those associated with a proxy generate suspicion. As the name suggests, a proxy acts as an intermediary, passing requests from one computer to other servers. But although there are legitimate uses of proxies, fraudsters are well known to use proxies. Detecting proxies comes with two challenges. The first is how to recognize an IP address as a proxy. The second is how to distinguish a “good” proxy from a “bad” one. In this post, we’ll discuss both of these challenges in detail and offer some tips on how to overcome them.
How to Recognize an IP Address as a Proxy
There are a few indicators that an IP address may be a proxy. The first is if the IP address is associated with multiple transactions. This could be an indicator that the same person is using the proxy to commit multiple frauds. Another indicator is if the IP address is associated with a sudden increase in activity. This could be an indicator that the proxy is being used by multiple people for fraudulent purposes. If you see either of these indicators, it’s worth investigating further to see if the IP address is indeed a proxy.
How to Distinguish a Good Proxy from a Bad Proxy
Once you’ve identified an IP address as a proxy, you then need to determine whether it’s a good proxy or a bad proxy. To do this, you’ll need to look at the country of origin for the proxy server and compare it to the country of origin for the transaction data. If they match, then it’s likely that the proxy is being used legitimately and you don’t need to be concerned. However, if they don’t match, then it’s likely that theproxy is being used for fraudulent purposes and it will likely be blocked.
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