Security Culture

Can IP Address Analysis Prevent Fraudulent Activities?

Every device connected to the internet holds a unique IP (internet protocol) address. IP addresses are the most common data points analyzed by compliance teams, account managers, site administrators, and operational teams. The addresses help teams track users’ activities, making it easy to prevent fraudulent activities over time. In this article at Security Affairs, Pierluigi Paganini explains how IP address analysis can help organizations prevent cyberattacks.

What is IP Address Analysis?

Today many businesses and professionals consider IP address analysis as one of the most valuable data points for avoiding fraudulent website activities. Although this is not the most accurate way to prevent cybercrimes, IP addresses carry significant weight in determining the risk profile of a transaction or a user.

So, how does this work? If an IP address is legitimate, it will indicate where the user is. It also helps organizations identify where the connection is coming from, such as a library, home, university, similar organizations, web servers, or data centers. The IP address will track activities such as moving through a site, scouring different online pages, etc. Furthermore, the address tracks the users’ online behavior over time.

However, when criminals launch attacks, they avoid using real IP addresses. Instead, they use VPNs, proxies, or access the connections of virus-infected computers connected to botnets to mask the actual IP addresses. This will complicate the validation process and prevent businesses from detecting the users’ location.

How Does the Analysis Help in Reducing Fraud?

IP address analysis is instrumental in distinguishing legitimate user activity from fraudulent. Blocking connections from an IP address detected in fraudulent activities is one of the effective ways to stop cybercrimes. Additionally, many businesses use tools to identify if an IP address is historically connected to fraudsters. Furthermore, the tools help IT professionals find the red flags in a site’s activities or visits. “The usage of consortium data is another method to verify IP addresses. Bringing different independent parties together is a standard method to fight against fraud,” says Paganini. Risk management is done right only when you identify, analyze, evaluate, and treat the threats before they turn into real problems.

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