How IP Verification Enhances Online Security and Prevents Digital Fraud

Online fraud is the biggest fear of companies and e-commerce websites. With every tech update, there is an increased risk of online fraud or hacking. Phishing, shopping fraud, investment scams, identity thefts, the list is endless.

What Are You Supposed to Do to Prevent Digital Fraud and Enhance Security?

Besides your conventional security measures, you can leverage IP verification. What’s that? Leveraging IP verification enables you to establish a strong defense against online threats by identifying risks and detecting anomalies.

You can create a more secure online ecosystem for users with this. Simply put, IP verification can help you identify unauthorized fraudsters and authorized users. Let’s buckle down and see how IP verification can enhance online security and prevent digital fraud.

What Is Digital Identity Verification?

Identity verification helps verify whether a user's identity credentials correspond to the real user, matching the appropriate person.

One step ahead, digital identity verification or computer-driven methods can authenticate a user's identity. When the user's physical documents are not present, you can use this method for authentication.

By validating IP address authenticity, you can verify the identities of users accessing your platform or website. With the help of IP address verification, you can prevent unauthorized access and online fraud.

You can identify suspicious activities such as multiple login attempts or suspicious hacking activities. Let's now see the difference between identity authentication and verification.

Identity Authentication vs Verification

Don’t confuse identity authentication and identity verification. Although they sound similar, they differ in approach.

Identity authentication deals with ensuring that the user involved in the transaction is actually the same one or the same company, as opposed to someone who pretends to be them.

On the other hand, the identity verification process is more about ensuring that the credentials of the customer correspond to the same person or company. It has more to do with the real identity of the company or user that visits your website. But how IP verification works, we’ll see next.

How Does the Whole Process Work?

This isn't so complicated if you get the gist. Digital IP verification collects a user's credentials and compares them with the records that trusted institutions (such as government entities) have on file.

Verified credentials are kept by institutions to check that the person is the same as claimed. Also, IP address verification checks the IP addresses against data points, which determines their risk level and legitimacy for various purposes such as network access and fraud prevention. IP address verification involves different tools and methods.

Methods You Can Use for IP Verification

With these methods, you can identify credentials that aren't physically present.

Biometrics

With biometrics (scanners), you can read the measurements of a user’s bodily features to identify them. Ideally, the most common feature is fingerprints, but you can also analyze facial features and voice patterns through videos.

One-Time Passcode

In this digital world, everyone has used a one-time passcode (OTP). It is a form of multi-factor authentication. A customer who wants identity verification must input a randomly generated passcode. The OTP is sent via text or email and expires after a few minutes. This adds an extra security layer over a static password.

ID Document

An ID document is an official document that you can scan to determine whether it is legitimate or not. If the credentials are already on file, you can check to determine if it's the same person. It's an ideal way to digitally verify a user’s identity.

Liveness Detection

Liveness detection is similar to biometric identification, but it uses motion detection to verify whether a user’s credentials are genuine. You can ask them to perform some actions in videos or measure their bodily functions. Of course, no user can fake pictures or videos easily with this feature in place.

How Can IP Verification Prevent Fraud?

IP verification can help prevent many types of fraud. Here are some ways you can strengthen your online security.

Detect Different Suspicious Patterns

You simply can't detect certain suspicious patterns with traditional security measures. But IP verification can help you with this. With the feature, you can identify mismatches between shipping and billing addresses or other known fraudulent locations.

Prevent Identity Fraud

If you verify addresses using IP verification, you can detect fake or stolen information, which fraudsters often use to hide their identities.

Help Protect Customer Trust

Customer relationships play a key role today. By using IP verification, you can reduce unauthorized transactions, which safeguards customers' financial and personal data.

Support In Reducing Financial Losses

You can reduce financial losses by using IP verification, as it can detect fraudulent addresses early on. In addition, you can prevent financial damages and chargebacks.

Geolocation

Using geolocation, you can add a layer of security to IP verification. How? You can deny access to IP addresses from locations where the client does not conduct business. Also, you can use this feature to combat fraud in digital advertising by removing fraudulent clicks.

Best Practices You Can Follow in IP Verification

Let's now see some best practices to follow in the IP verification process.

Create an Identity Verification System

As discussed above, there are various ways to verify customer identity, each with pros and cons. Once you understand your relative risk level, you can create a feasible system that conforms to your requirements. Of course, you cannot use random methods; stick to the ones that you need.

Assess Risk Profile

When you assess your risk profile, you can get clarity on the level of risk in your current operations. For example, the types of services you offer and the risks associated with them. There may be a section more vulnerable to financial crimes. Depending on the demographics and services, you can assess the profile.

Evaluate Client Risk

You can also evaluate individual client risk. For this, you will have to compare their credentials with updated databases regarding illegal activities or other risks involved.

For example, if someone has a history of shady dealings, they may have a criminal background. When you evaluate such risk, you can distinguish higher-risk users or clients from those that pose lower risk.

Keep All Records Updated

Keeping all the records updated is essential in IP verification. With a record of vitals and backgrounds, you can keep track of changes and build a history of user activities.

With such a history, you can easily spot what isn’t typical behavior. By keeping records updated, you maintain clear evidence of how your identity verification platform is working. Therefore, maintaining a record of verified identities is essential.