Proxy detection services identify anonymous IP addresses used to mask a user's real location. Proxy use by itself doesn't mean fraud — it becomes meaningful when combined with other data points, which is exactly what these services are built to help with.
How fraudsters actually use proxies
A fraudster can make their IP geolocation look like it's coming from the same region as stolen credentials — appearing legitimate while hiding their real location. In account takeover or card-testing schemes, a proxy also lets the same actor look like a different user each time, circumventing velocity and pattern checks.
Not all proxies are equal
Some proxies are entirely reputable, and blocking them indiscriminately would hurt sales conversion for no good reason. The better approach targets proxies tied to compromised computers or with a track record of fraud use — not anonymous proxies as a category.
What to evaluate
- Proxy piercing — the ability to see through a VPN to the true origin
- How reliable the risk assessment is for a given identified proxy
- How fresh and frequently verified the underlying data is
- Corporate proxy detection specifically
- Post-event alerting capability
Putting it into practice
When a proxy is detected, location-based confidence signals — like an IP matching the billing address — should be disregarded rather than trusted, since they're exactly what a proxy is designed to fake.