A failed Online Fraud Check (High Threat) does not confirm that a transaction is fraudulent.
There may be legitimate reasons why this check may not have passed.
The Online Fraud Check assesses the risk associated with a transaction. It works by comparing two key location indicators:
- Device Location: The geographical location of the device used to complete the verification.
- Internet Service Provider (ISP) Location: The location registered to the IP address of the internet connection being used.
An analysis of the IP address is also conducted to identify potential red flags.
- The use of services designed to obscure location, like Virtual Private Networks (VPNs) or firewalls.
- An origin from a country with a high-risk profile for fraudulent activities.
- Inclusion in databases of IP addresses previously linked to fraudulent behaviour.
Interpreting the Results
Ideal Outcome:
For a low-risk transaction, both the device location and the ISP location should be in the same country and in close geographical proximity to one another.
When a Check Fails:
- Use of a VPN: The individual may be using a Virtual Private Network (VPN) for privacy or security reasons, which can mask their true location.
- IP Address Reassignment: The IP address may have been recently sold or reassigned to a new location.
You can find further information from our geolocation provider https://db-ip.com/ and entering the IP address.
Investigating a Failed Check
If an Online Fraud Check fails, a further assessment is necessary to determine the level of risk. Consider the following questions:
- Did any other verification checks fail? A higher number of failed checks indicates a greater risk of fraud.
- Cross-Border Discrepancy: Are the device and IP locations in different countries? This can be a significant indicator of potential risk.
- High-Risk Country of Origin: Is the IP location associated with a country known for a high rate of online scams?
- Is a VPN enabled? If a VPN shows, it could be as the device they are using is linked to their line of work. Try to find out what job they might do and if it is related.
- Location Check: It may be worth asking your client to confirm where they performed their VOI and check it corresponds with the derived location shown.
Next Steps
After evaluating the points above, you must review the transaction in accordance with your own internal policies and determine if it is compliant based upon your industry standards. You can then decide on the appropriate course of action, which may include proceeding with Force Matching the transaction.