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"I know I can collect an IP address for all of my online transactions, but can I use this data to weed-out suspicious transactions?" Yes, you can!

An IP address (or Internet Protocol address) is a unique address that certain electronic devices use in order to identify and communicate with each other on a network utilizing the Internet Protocol standard (IP)—in simpler terms, a computer address.

Due to static address assignments, an IP address is usually a unique identifier for a particular computer. However, just as there are good and bad street addresses, there are good and bad IP addresses as well.

Different factors and variables are considered when validating and scoring an IP address. Leading indicators of potential fraud comes from IP addresses assigned to high-risk countries. For example, countries like China, Malaysia, India, Vietnam, and Pakistan have the highest likelihood of fraudulent transactions. To combat this form of fraud, some e-commerce sites are already using IP-to-Country information, which is commonly known and very accurate.

As scammers become more sophisticated they are attempting to hide their real IP address (and location) by hijacking a computer that has been hacked with Trojans and/or viruses. These backdoors into compromised computers allow scammers to perform transactions as if they were actually sitting at that computer, thereby hiding their true location. This method of online fraud makes IP-to-Country lookup detection obsolete, but now there is a solution…

DOTS IP Address Validation^SM has over 45,000 listening posts worldwide. Whenever suspect activity is identified by a listening post, the computer address (IP) is instantly added to our current watchlist of suspect addresses. The information is then immediately made available to all DOTS Lead Validation^SM and DOTS IP Address Validation users. By combining the use of listening posts and IP-to-Country fraud detection, Service Objects has leveled the playing field; quickly identifying possible fraudulent transactions as they occur.



Further advantages in online fraud can also be accomplished by comparing the Bill-to, Ship-to, and IP location. Service Objects’ DOTS IP Address Validation utilizes ultra-accurate maps to pinpoint an IP address to within 10 miles of its actual location, with over 95% accuracy. Transactions that have Bill-to, Ship-to, and IP addresses that are not within a tight region are potentially fraudulent and should be reviewed. Service Objects' family of DOTS Web Services can identify online orders that have poor geographic fidelity, and immediately flag them so businesses don’t waste their efforts on phantom orders and possible chargeback situations.

IP validation is quickly becoming a top indicator of online fraud. Scammers have learned that they can fool most systems if they have a valid credit card and the owner’s address. However, scammers can not easily fake the owner’s IP address. By blending multiple IP-to-Country databases and over 45,000 listing posts, DOTS IP Address Validation can identify fraud faster and more reliably than most other commercially available services.

When you really know where your customers are coming from you can minimize risk, improve conversion, and reduce fraud.