The IP address risk score is a number that represents the likelihood of fraud associated with an IP address. Companies use this metric to minimize the chances of threat actors entering their websites and services. It’s commonly used in regulated industries like banking and insurance, as well as e-commerce to prevent chargebacks.

To calculate the risk, a number of different factors are weighted against one another and assigned a value. These can include things such as location consistency (e.g., does the IP address match the city in which it’s reported to be located), blacklisting, and device information, including proxies and emulators that can hide or alter IP data.

IP Address Risk Score: Measure Online Security Threats

These data points are then tallied to produce an overall score. The more points an IP address has, the higher the risk. Ideally, this can be done in real time so that the company can decide whether to allow or disallow access.

While fraud scoring can be a great tool to reduce fraudulent activities, it’s important that businesses don’t overuse it. Relying solely on a fraud score can lead to false positives that can disrupt customer experience and damage a business’ reputation.

For example, using a proxy that has been compromised can raise an IP’s risk score significantly. As such, it’s important for businesses to work with a vendor that offers zero-fraud proxies to ensure the integrity of their scores. They should also consider customized scoring settings and API inputs to increase the accuracy of their detection.