Proxies are more widely used by online fraudsters to engage in cyber crimes since it is the easiest way to hide their actual Physical location such as state/City/Country through a spoof IP address.
Below are few of the examples where fraudsters use the proxies to hide their actual IP address.

1. Frauds by Credit Card


2. Bypass Website Country Restrictions

To avoid such frauders to stop such online frauds, Proxy Detection has become a critical component. Today most companies, credit card merchants and websites that deal with e-commerce transactions make use of Proxy Detection Services like MaxMind and FraudLabs to detect the usage of proxy or spoofed IP from users participating online.

How a Proxy Detection Works?


Proxy detection services often rely on IP addresses to determine whether or not the IP is a proxy. Merchants can obtain the IP address of the users from the HTTP header on the order that comes into their website. This IP address is sent to the proxy detecting service in real time to confirm it’s authenticity.

                          The proxy detection services on the other hand compare this IP against a known list of flagged IPs that belong to proxy services. If the IP is not on the list then it is authenticated and the confirmation is sent back to the merchant. Otherwise it is reported to be a suspected proxy.
         
These proxy detection services work continuously to grab a list or range of IPs that are commonly used for proxy services. With this it is possible to tell whether or not a given IP address is a proxy or spoofed IP.

How to Know Whether a given IP is Real or a Proxy?


There are a few free sites that help you determine whether or not a given IP is a proxy. You can use free services like WhatisMyIPAddress to detect proxy IPs. Just enter the suspected IP in the field and click on “Lookup IP Address” button to check the IP address. If it is a suspected proxy then you will see the results.