How to Stop Proxy-Based Fraud

The very things that make proxies and VPNs useful to real users can also be used for criminal activities like ad fraud, form jacking, and more. This is why fraud detection systems need to be smart enough to identify and protect against them.

Fraudsters stop proxy-based fraud  servers to hide their true IP addresses, making it difficult for systems to detect fraudulent activity. This helps them exploit regional vulnerabilities and conduct unauthorized transactions or data breaches without raising alarms. Proxy fraudsters can also spoof their location to impersonate legitimate customers, creating a false sense of trust.

Residential Proxy Databases: How They Identify Hidden Proxy Networks

For example, a fraudster may use a residential proxy that is flagged by ecommerce platforms as “home” and with a stable service (%). The attacker then launches a reverse proxy phishing attack that looks and functions just like a normal login page. The victim lands on the fake site, enters their credentials and MFA codes, and the malicious proxy server relays them to the actual login in real time. This bypasses security checks and enables the fraudster to take over the session and log in before MFA expires.

This type of fraud is costly for ecommerce companies and undermines customer trust, leading to revenue loss and brand damage. It’s why it’s important for merchants to stop proxy-based fraud through a combination of prevention and protection, including proxy piercing.