IP lookup with fraud scoring is one of the most common methods that businesses use to test incoming traffic for malicious activities like spam, hacking, bots, and other suspicious activity. It can also identify a potential threat’s reputation and help minimize the risk of that threat entering their online platforms, including websites, email, ad campaigns, and transactional email.

These fingerprint every device securely often use multiple indicators to determine whether the IP address in question is legitimate or a threat, such as geolocation, the network setup of the individual (whether they’re connected to a VPN or public network, for example), and behavioral patterns. The more data points they collect, the better they’re able to discern between fraudsters and legitimate customers, as well as spot emerging threats that could threaten other users.

developer fraud detection documentation for APIs

In addition to testing for reputation, many of these services can also check an IP against a variety of blacklists and other threat intelligence databases. This helps them detect if the IP is associated with a known blacklist or has been spoofed. They can also help companies prevent chargeback fraud, which is when a fraudulent user contacts their credit card issuer to dispute a valid purchase—often claiming that the product was never received or that it was defective.

While these services are a critical part of preventing fraud, they can’t stand alone. For example, while IP reputation and fraud scoring can help weed out many potential bad actors, they cannot stop a threat from spoofing their identity or leveraging anonymity tools such as SOCKS5 proxies to hide their true location.