As the fraudsters are now becoming more sophisticated in bypassing the Geo-location controls by using proxies (Anonymous IPs) to spoof their IP address, it has become very much necessary to come up with a means for detecting the proxies so that the authenticity of the users can be verified. Using a proxy (web proxy) is the simplest and easiest way to conceal the IP address of an Internet user and maintain the online privacy.
However proxies are more widely used by online fraudsters to engage in cyber crimes since it is the easiest way to hide their actual Geo-location such as city/country through a spoofed IP address. Following are some of the examples where fraudsters use the proxies to hide their actual IP.
1. Credit Card Frauds
For example, say a Nigerian fraudster tries to purchase goods online with a stolen credit card for which the billing address is associated with New York. Most credit card merchants use Geo-location to block orders from countries like Nigeria and other high risk countries. So in order to bypass this restriction the credit card fraudster uses a proxy to spoof his IP address so that it appears to have come from New York. The IP address location appears to be legitimate since it is in the same city as the billing address. A proxy check would be needed to flag this order.
2. Bypass Website Country Restrictions
Some website services are restricted to users form only a selected list of countries. For example, a paid survey may be restricted only to countries like United States and Canada. So a user from say China may use a proxy so as to make his IP appear to have come from U.S. so that he can earn from participating in the paid survey.
PROXY DETECTION SERVICES
So in order to stop such online frauds, Proxy Detection has become a critical component. Today most companies, credit card merchants and websites that deal with e-commerce transactions make use of Proxy Detection Services like MaxMind and FraudLabs to detect the usage of proxy or spoofed IP from users participating online.
Proxy Detection web services allow instant detection of anonymous IP addresses. Even though the use of proxy address by users is not a direct indication of fraudulent behaviour, it can often indicate the intention of the user to hide his or her real IP. In fact, some of the most used ISPs like AOL and MSN are forms of proxies and are used by both good and bad consumers.
How Proxy Detection Works?
Proxy detection services often rely on IP addresses to determine whether or not the IP is a proxy. Merchants can obtain the IP address of the users from the HTTP header on the order that comes into their website. This IP address is sent to the proxy detecting service in real time to confirm it’s authenticity.
The proxy detection services on the other hand compare this IP against a known list of flagged IPs that belong to proxy services. If the IP is not on the list then it is authenticated and the confirmation is sent back to the merchant. Otherwise it is reported to be a suspected proxy. These proxy detection services work continuously to grab a list or range of IPs that are commonly used for proxy services. With this it is possible to tell whether or not a given IP address is a proxy or spoofed IP.
How to Tell Whether a given IP is Real or a Proxy?
There are a few free sites that help you determine whether or not a given IP is a proxy. You can use free services like WhatisMyIPAddress to detect proxy IPs. Just enter the suspected IP in the field and click on “Lookup IP Address” button to check the IP address. If it is a suspected proxy then you will see the results something as follows.