Minimising fraud prevention friction without compromising security with IP address analysis

Member News
Sep 22, 2022

Since fraud is a major problem for people and businesses today, there are now many ways to counter it, from simple mindfulness while online to high-tech cybersecurity.

The best methods, however, can be a hassle, especially for firms and their customers, as these processes require information, various tools, and time to complete their checks.

Fortunately, businesses can also manage how much friction their anti-fraud checks create by using the right tools for their organization and making the most of them.

IP address analysis is one such efficient tool that can provide plenty of information and spot bad actors without frustrating legitimate users.

IP Address Lookups Are Frictionless

The less you need to bother a customer for information and additional security steps, the fewer obstacles you place between them and their goal on your website, for example, whether it’s to create an account or finalize a payment.

That’s why it’s so important to keep friction like this as low as possible. Otherwise, you risk losing customers and sending traffic to competitors. So, how do you avoid demanding too much from users and block fraudsters? You work smart.

All IP analysis needs is that address. The rest of the process depends on your lookup tool, which, as SEON explains, can check any or all of the following:

  • The IP address’s ping response time, which should be under 100ms at most.
  • Its geolocation.
  • Its IP hostname and domain.
  • Its WHOIS information, drawn from the address’s regional internet registry like the Ripe NCC, which coordinates the internet infrastructure of Europe, the Middle East, and parts of Central Asia.
  • Whether the user is hiding their real IP address behind a proxy, VPN, or Tor node.
  • Whether the Domain Name BlackList (DNSBL), RealTime Blacklist (RBL), and other watchlists already class the address as dangerous.
  • Whether any open ports are risky.

All-in-all, IP address analysis can show you a user’s location, activity, associations, and more, not to mention any red flags pointing to a scammer. It’s a type of data enrichment that starts with a simple data point, produces several insights, and minimizes friction for customers.

At the same time, it helps you focus on protecting your business from fraud and its damages, not a bad deal as Visa tightens its chargeback rules, more pressure on companies to avoid the slightest misstep.

IP Checks Make Fraud Detection and Prevention Easier

In addition to offering a smooth user experience that satisfies customers and blocks bad actors, the amount of information IP address analysis can provide benefits anti-fraud measures in other ways.

Detailed Insights Help Spot Fraud Correctly

Looking up an IP address can reveal more about its user than the data points mentioned above. For example, you can see the frequency of activities and whether the address uses bots.

But identifying bad actors also takes some interpretation as many people use VPNs or go online on their phones, connect to different mobile towers, and blur their exact geolocation.

The range of tools available, however, like ping tests and reverse DNS or IP lookups to get a domain name, gives agents or automated systems enough information to accurately decide whether a user is in fact suspicious.

Risk Assessment Is Fast and Precise

IP address analysis is all about identifying legitimate users and getting rid of the dangerous ones, so almost every tool and resource is there to benefit your risk checks, both manual and automated.

Risk scores are common among top IP lookup services to quickly evaluate the information gathered about an address and calculate how much of a threat it is, if at all. You’ll often find cybersecurity tools, as well, to protect from hacking threats.

The existence of blacklists is another perk to fraud prevention in general, but what’s even better is that services like IP lookups have incorporated easy access to them. Risk checks can then block and warn you about spammy or criminal addresses.

As bad actors find new ways to scam people, from fake social media profiles to 2FA prompt bombing, these lists continue to grow and help businesses keep their customer base legitimate.

Between these expansive processes and more precise options like open port risk checks, you can build a robust security system for your organization that counters fraud attempts promptly and doesn’t inconvenience customers too much.

Layers of Anti-Fraud Checks Allow Shifts in Focus

With a good fraud prevention service, you’re sure to have several tools at your disposal, all working together to stop criminals from entering your system, causing trouble, and ruining your reputation in the process.

Once the best combination of checks is in place for IP address analysis and beyond, you’re free to deal with other company matters that need your attention, especially if they can boost your reliability further.

For example, you could make up for any friction caused and strengthen your overall customer service, including its reporting system, so that legitimate users can contribute to your safeguarding efforts.

After all, fraud prevention comes down to smooth collaboration between real entities, not just software and databases. Efficient partnerships with law enforcement and other agencies, as well as clients, combat fraud like nothing else as they spread awareness, enforce security measures across sectors, and make it harder for criminals to get a foothold.

Anti-Fraud Strategies Evolve to Better Counter Threats

It’s difficult to thrive in the current digital landscape without adequate protection from fraud, hacking, and other dangers. As more and more businesses go online, some in a hurry and unprepared, opportunities for criminals expand.

According to Juniper Research, fraudsters cost global eCommerce $20 billion in 2021, marking an 18% increase in losses since 2020. New tools like deepfake and machine learning technologies take bad actors’ range of malware and scams to the next level, creating quite advanced threats to people and businesses alike.

Countermeasures have evolved, too, however. Besides IP address analysis as an essential part of filtering through new and existing users and spotting suspicious parties around the world, there are many additional anti-fraud tools to combine it with for the best possible results.

A report published by the Association of Certified Fraud Examiners (ACFE) offers interesting insights on the matter. As of 2022, more than half of businesses use automated systems to monitor their organizations’ performance, red flags, and deviations from normal processes.

Data analytics for fraud detection are applied to two areas in particular: disbursements (43%) and purchasing (41%). And even though the cost of implementing top anti-fraud solutions gives companies pause, 34% take the plunge with physical biometrics, too, while 17% plan to follow suit in the next two years.

An especially hopeful statistic from ACFE is that 34% of organizations share data to boost anti-fraud efforts and 24% aim to do the same in the future. Fraudsters do manage to hit their marks now and then, but they already have their work cut out for them and their situation can become harder still.

At the end of the day, collecting and analyzing data with the help of high-end automated software is key to countering fraud attempts. It’s a good idea to include an IP address lookup tool as it’s a frictionless and very useful data enrichment method. Any extra technology you can add within your budget, from digital ID checks to biometrics, is worth the expense if it keeps criminals at bay and your organization safe from fraud.

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