What are reliable ways to detect VPNs and proxies during user sign-up?
In a world where security and data privacy are important, online businesses face a crucial challenge: how to distinguish between a legitimate user and a potential threat.
How VPNs and proxies work
VPNs and proxies work by routing a user's internet traffic through a third-party server. This hides their actual IP address and associated location, making their digital activity appear to originate from the server's location instead.
Why they create challenges for businesses
For a business, this creates a problem. A fraudster might use a VPN to hide their true location to bypass geo-restrictions, create multiple accounts, or evade a block on their actual IP address. The challenge for a business is that many people also use these services for privacy or networking purposes. So, how can a business tell the difference?
Types of anonymous IPs
One of the most reliable methods is using IP anonymizer data. Think of this as a digital watch list for IP addresses. Instead of a business having to manually identify a suspicious IP, a specialized database tracks IP addresses that are known to belong to:
- Commercial VPN services
- Public proxies
- Hosting providers and data centers
- Tor exit nodes
When a new user signs up, the business can check the user's IP address against this database. If the IP is flagged as a known VPN or proxy, it doesn't automatically mean the user is malicious, but it does add a layer of risk to the sign-up. Learn more about the different types of anonymous IPs.
Going beyond anonymizer lists: IP reputation
IP anonymizer data is a great start, but no single piece of information provides a complete picture. More comprehensive fraud detection data systems, such as minFraud, also pool data from thousands of e-commerce and digital platforms into a data network to assess risk. minFraud uses machine learning to assess the previous activity sighted on an IP and other digital metadata and raises the risk if there's a high percentage of activity from suspected fraudsters.
By tapping into a network-wide view, a business can build a more comprehensive risk score for each sign-up, reducing false positives from good customers using low risk VPNs that an anonymizer list might block.
A multi-layered approach
There is no single "silver bullet" to detect all VPNs and proxies. A truly reliable solution requires a multi-layered approach. It starts with a quality IP geolocation and anonymizer database to identify the initial risk, and real-time network intelligence to distinguish between low and high risk anonymizers.
By using these methods in combination, businesses can more accurately identify and block high-risk sign-ups while minimizing friction for legitimate users. This balance of security and usability is key to building trust and protecting the integrity of an online platform.