Here is an interesting article that I came across that is proposing stronger criminal sentences for online crimes where an anonymizing proxy is used. The intent here is that crimes committed while using an anonymizer indicate a higher level of sophistication. Critics of the measure state that this puts a stigma on what is many times seen as a good practice for protecting the online user’s privacy.

Independent of those issues, we at iovation have actually been studying the correlation of use of a proxy to online fraud and abuse. The early results are that for online businesses, users who utilize an anonymizing proxy have a higher rate of fraud and abuse than those that don’t, but it isn’t a sufficient independent indicator of fraudulent activity. In other words, for analyzing the risk of a given online transaction, checking for the use of a proxy is one of many important checks in assessing the overall risk, but it is not sufficient independently to determine whether an online user is bad. This also varies by industry. For example, the use of proxies is rarer at mainstream sites like online banks and retail sites as opposed to online dating sites where individuals may be more concerned about maintaining anonymity.

One thing remains certain, however, and that is the use of proxies to mask their true IP address remains extremely high. We have found that if an online criminal, for example, is using stolen French credit cards to defraud businesses from the Ukraine, the criminals will often go to the extent to ensure that they use a proxy that identifies their machine as originating from France to bypass many of the fraud checks that online businesses use.

In my 17+ years in security I have often heard and repeated that security is a process, not an event, and in the high stakes games of online fraud, this is no different.

Tags: anonymizer, anonymizing proxy, online crime, Online Fraud

This entry was posted on Friday, April 17th, 2009 at 8:43 am and is filed under Financial Services, Online Communities, Online Gambling, Online Gaming, Online Retail, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.