Topics Types of Bank Fraud 12 Most Common Types of Bank Fraud Account Takeover (ATO) Fraud Advance Fee Fraud Check Fraud ACH Fraud Real-time Payment Fraud First-Party Fraud Wire Fraud Zelle Fraud Types of Card Fraud Credit Card Fraud Debit Card Fraud Lost or Stolen Card Fraud Card Skimming Card Cloning Chargeback Fraud Card Not Present (CNP) Fraud Fraud Defenses Anti-Money Laundering (AML) Behavioral Biometrics Crowdsourced Abuse Reporting Device Fingerprinting Real-time monitoring Email Reputation Service IP Reputation Service SR 11-7 Compliance Supervised Machine Learning Suspicious Activity Reports (SARs) Tokenization Transaction Monitoring Two-Factor Authentication (2FA) Unsupervised Machine Learning Fraud Tactics Bot Attacks Call Center Scams Credential Stuffing Data Breaches Deepfakes Device Emulators GPS Spoofing Money Mule Scams P2P VPN Networks Phishing Attacks SIM Swap Fraud URL Shortener Spam Web Scraping Fraud Tech Anomaly Detection Device Intelligence Feature Engineering Generative AI Identity (ID) Graphing Network Analysis Natural Language Processing Fraud Types Application Fraud Transaction Fraud Payment Fraud Pump and Dump Scams Bust-Out Fraud Buyer-Seller Collusion Content Abuse Cryptocurrency Investment Scams Money Laundering Loan Stacking Romance Scams Rug Pull Scams SIM Swapping Synthetic Identity Theft Cryptocurrency Scams Pig Butchering Scams IP Reputation Service What is an IP Reputation Service? An IP reputation service provides a reputation score for an individual IP address that can be used by organizations as a signal in a fraud risk scoring system. IP reputation services became a popular solution for risk scoring because they not only signal that an IP address hosts malicious content but also that it exhibits automated bot behavior. Before the advent of IP reputation services, organizations relied primarily on solutions that linked the universal resource locator (URL) to malicious content such as spam, phishing emails, and malware. But URL-based solutions were not effective because they were slow in identifying attacks and fraudsters found ways to circumvent them. IP reputation services are now facing similar issues, as fraudsters leverage new tools and technologies to avoid detection. What Should Companies Know About IP Reputation Services? IP reputation services are limited when it comes to assessing the risk of an IP address because these services typically assess risk based on the history of the IP—whether the IP address has exhibited malicious activity in the past and if there are any changes since the last time the IP address was seen by the service. Most IP addresses generated by fraudsters have virtually no history because fraudsters use tools such as cloud infrastructure and residential virtual private networks (VPNs) to mass-create anonymized IP addresses in a short period of time. The use of these tools by fraudsters diminishes the effectiveness of IP reputation services because the tools also allow fraudsters to spoof IP addresses and run bots that mimic authentic human behavior. Residential VPNs are especially problematic for IP reputation services because they offer cheap residential IP addresses that allow fraudsters to mimic authentic residential IP traffic such as hopping from IP to IP—behavior that would typically indicate a trustworthy user. Fraudsters can also cycle through residential IP addresses so quickly that blacklists cannot keep up. IP reputation services reference blacklists as part of an IP address risk evaluation. Overall, our research found that 65% of the IP addresses generated by fraudsters are used for seven days or less. As fraudsters become increasingly adept at mimicking trustworthy user behavior, the effectiveness of IP reputation scoring systems will continue to deteriorate. Another limitation of IP reputation services involves the sheer number of IP addresses that will need to be monitored, evaluated, and assigned a risk score as the number of available IP addresses increases from a little under 4.3 billion to approximately 340 undecillion under the rollout of Internet Protocol version 6 (IPv6). With so many IP addresses becoming available soon, it will be increasingly difficult for IP reputation services to monitor IP threat activity effectively. Organizations must be prepared for high-scale malicious attacks involving staggering numbers of IP addresses. IP reputation services are not an adequate solution for the depth and scale of modern fraud. Organizations need a solution that assesses risk based on a wide range of signals and links among users and transactions. Detect and Prevent Malicious Activity with DataVisor Given the combined ease of mass-creating anonymized IP addresses in a short period of time, and the massive increase in available IP addresses, IP reputation services are no longer an effective fraud prevention mechanism. The only viable approach is to replace them with comprehensive, AI-powered solutions that can detect as rapidly as fraudsters act. The ability to correlate seemingly independent actions that are in fact part of a coordinated attack strategy is critical to detecting and preventing modern fraud, and it is only through holistic analysis and contextual detection that malicious activity can be exposed while still in a pre-launch stage—before damage occurs. Additional References Webinar: DataVisor Webinar – Dumb & Dumber vs. Oceans 11 The Sophistication Spectrum of Fraud Source: What is the total amount of public IPv4 addresses?, Stack Overflow Source: Internet Protocol Version 6: IPv6 for Consumers, Federal Communications Commission (FCC) Source: Host IP reputation, Google Patents Source: Neustar IP Reputation, Neustar Source: minFraud riskScore, MaxMind