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When you’re busy trying to make your online marketing campaigns a success, having to fight fraudsters is a major hassle. The problem with ad fraud (other than the fact that it steals your money) is that fraudsters are always coming up with new ways to defraud your business and escape the consequences.
One tool that some fraudsters have learned to employ is the residential proxy. What is a residential proxy? More importantly, what does it have to do with ad fraud?
A residential proxy is a technique that can be used to obscure the IP address of someone (or something, like a bot) using the internet. This works by routing traffic through an “intermediary server,” which can be any device capable of accepting web traffic and passing it along to another device or website.
Since the activity is being stopped and rerouted through a different device, that device’s IP address is relayed to the destination website instead of the actual origin device. This conceals the real website visitor’s IP address from the website—and thus, security admins, hackers, and others.
Residential proxies specifically route their traffic through residential IP addresses—which means IP addresses that are, as defined by Proxyway, “registered under an internet service provider that offers services to consumers.” This may differ from proxy servers, which include data centers designed specifically for businesses to use for large computing needs.
Fraudsters typically use anonymous proxy services to hide their IP address, though there are proxy services that are “transparent,” meaning that they keep the traffic source’s IP data visible to others.
Some proxy servers have a “rotating proxy” feature that assigns a new IP address to the traffic it routes with every new connection. These rotating proxies are ripe for abuse by fraudsters who need an easy way to disguise all of their fraudulent traffic with ease.
There are many different ways to use residential proxies for both legitimate and illegitimate purposes. Some examples include:
These are just a few of the legitimate and illegitimate uses for residential proxies. As with any tool, there will always be someone who looks for a way to abuse residential proxies for their own personal profit.
Everyone loves free stuff. However, the reality is that nothing is actually free. There’s always a cost. So-called “free” residential proxy services are one example.
Some residential proxy service providers (not all, but some) will offer consumers a “free” proxy service app for their home computer, phone, or other devices that will give them access to a proxy network. When the consumer downloads the app, it installs software that allows the proxy service provider remote access to their network or computer so they can route other customers’ traffic through the consumer’s network.
Whether the consumer realizes that they’re hosting someone else’s traffic through their network (and thus, having that stranger’s activities traced back to them) varies by consumer and proxy service. Some might disclose how their residential proxy service works upfront in their sales pitch and advertising, others might bury it on some page of a “Terms of Service” agreement that 99.9% of their customers will never read, and some might neglect to mention that they’re giving others access to the consumer’s network at all.
Non-residential proxy services and VPNs might have large, formal data centers that they route all of their traffic through to anonymize it—though these service providers typically charge for the privilege.
So, why are residential proxies a problem for your online marketing efforts? A large part of the problem is that these proxies can be an easy way for fraudsters to hide and make their bad traffic look legitimate for just long enough to collect the money and run.
However, there are other problems with proxies aside from delaying the detection of ad fraud.
One of the bigger problems with residential proxies is that it can make traditional fraud prevention techniques like IP blocking completely irrelevant (or worse, counter-productive). The risk of residential proxies is one of the primary reasons you shouldn’t rely on IP blocking as an anti-fraud tactic.
Why? Because, instead of stopping the fraudster, all you’re doing is blocking a potentially legitimate IP address and all of the traffic that would normally come from that source. The fraudster doesn’t care if you block that IP address—their residential proxy tool will simply assign them a new IP address and they’ll keep going on like nothing ever happened.
Meanwhile, what happens to the consumer (or consumers) who have had their IP address blocked through no fault of their own? What if they, at some future point, want to interact with your brand or advertising in the future? The problem is that, if you’ve blacklisted their IP address, they won’t be able to. By blocking their IP address, you will be preventing them from legitimately interacting with your online advertising.
If the IP address being used in the proxy belongs to a large communal dwelling (like an apartment building with free public Wi-Fi) or to a business, you could be throwing out dozens or hundreds of potential customers because of a single malicious actor.
So, if IP blocking isn’t sufficient to stop the abuse of residential proxy services by fraudsters, how can you protect your business’ ad campaigns from fraudulent bot traffic that leverages proxy networks?
One of the best solutions is to use an ad fraud solution that can differentiate fraudulent traffic from real traffic using more than just the traffic’s IP address. For example, Anura’s ad fraud solution analyzes hundreds of data points about every website visitor and compares that analysis to a database of real customer conversion data spanning years of activity.
Instead of a shallow analysis based on a single datapoint, Anura works to positively identify fraud as it happens so you can avoid paying for fake clicks, leads, or impressions caused by bots regardless of what IP address fakery the fraudster uses.
Don’t let your money go to lining a fraudster’s pockets. Stop fraud cold by leveraging the power of a real-time ad fraud solution—which will also help you get more ROI for every dollar you spend on online advertising since you won’t be paying parasites for fake leads.
Reach out now to get started!
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