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The top 10 phrases used in the fraud industry

Welcome back for part two of our ten part series!

In our last post, we talked about Velocity. Today we are talking about reverse IP (internet protocol) address checks. If you have heard the term ‘IP’ before, but are not exactly sure what it means, the following explanation by Wikipedia really puts it in layman’s terms. IP Address: ‘A unique string of numbers separated by periods that identifies each computer attached to the Internet.’ By tracking an IP address, merchants can determine exactly where a consumer is located in world. Curious individuals can experiment with tracking IP addresses as well at this website. Determining the location of an individual by IP is a critical step in determining if a purchase is fraudulent. So without further delay let’s discuss reverse IP tracking and address checks.

#2 Reverse IP address checks

Here is a familiar story for most shoppers on vacation. You are in another state, you have been using your credit card to make a few purchases and suddenly your card stops working. What happened? The card issuer noticed that the location of the purchases being made are not in the normal geographic location of its holder, and within a few minutes the real card holder will most likely receive a phone call about the recent transactions made to verify their whereabouts and if they were the ones who placed those orders.

Reverse IP address checks look up functions the exact same way, only instead of calling the individual, a merchant will track the Internet Protocol (IP) of where the purchase was made to determine if the location is in the normal vicinity of past purchases. The importance of checking for the IP cannot be understated enough. A fraudster can have the credit card number, pin, correct billing and shipping address and make a normal sized purchase. But if you notice that this purchase is coming from Kazakhstan, but the card was issued from the U.S., that may be a red flag that this person’s financial information could be stolen.

For a real life story of an IP address lookup being used to stop fraud, this story is an interesting quick read.


                 Hackers falsely believe wearing a bandana makes them more ‘gangsta’

The customer has a trusted domain

Perhaps more importantly though, checking for IP can help you determine if you are going to accept an order that a credit card issuer might normally decline for normal, out of state reasons. A military member who frequently moves might cause a headache for a card issuer, but an ip address coming from a military base coupled with a .gov or .mil email domain is highly unlikely to be fraudulent given the difficulty of obtaining those domains and the general rarity of them in contrast to the rest of the internet.

The customer is on the road

Let’s imagine an alternate scenario where checking IP is going to be a deciding factor in an internet retailer’s decision to ship or not ship a product.

The shopper is a campaign worker on the road, and has just taken on this position. Previous to this role, the shopper has hardly left her home state of Indiana, traveling only to nearby Kentucky and Ohio. Our shopper frequently posts to Twitter, LinkedIn and other networks, and ‘checks in’ everyday on Facebook. Our shopper knows that in 7 days she will be back home off the road, and makes a purchase from her hotel room to be delivered to her house. The merchant will be able to see that this purchase was made from a hotel internet IP in Arizona. Using social sites, the merchant will additionally be able to see that our shopper has a job on the road and is currently residing in the state of Arizona, validating that while the IP address is indeed far from the shipping address it is in fact a real purchase, and flows through the merchants website without being held up for review.

That is all we have for now, but stay tuned for post #3 in a few days! As always feel free to reach out to us if you have any questions at [email protected] or at [email protected] if you are interested in a free trial of our services.



Signifyd, the leading commerce protection provider to Digital Commerce 360's top 1,000 merchants, provides an end-to-end Commerce Protection Platform that leverages its Commerce Network to maximize conversion, automate customer experience and eliminate fraud and customer abuse for retailers.