Velocity Check

What is Velocity Check?

Velocity check is a real-time fraud prevention method that tracks the rate or frequency of certain user actions, such as payment attempts, account logins, or email verifications, over a specific period. It is designed to detect and block suspicious activities that deviate from typical behavior. For example, a sudden surge in transactions from a single account or IP address may indicate fraudulent activity, such as bot attacks, card testing, or account compromise.

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Velocity checks are commonly used in e-commerce, financial systems, and authentication processes to prevent abuse and unauthorized activity.

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How Does Velocity Check Work?

Monitoring and Tracking

• A velocity check system continuously monitors user actions like purchases, login attempts, or password resets.

• Actions are tracked based on unique identifiers, such as account IDs, IP addresses, or payment card numbers.

Setting Thresholds

Predefined thresholds are set for allowable actions within a specific timeframe. For example:

• No more than three login attempts within five minutes.

• No more than ten payment attempts from the same card within one hour.

Detecting Anomalies

If the rate of activity exceeds the threshold, the system flags the behavior as suspicious. Depending on the severity, the system may:

• Block further actions.

• Trigger manual review.

• Escalate the incident for additional authentication.

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Use Cases

Legitimate Scenarios

• Payment Systems: Monitoring credit card transactions to detect rapid, repeated attempts that may indicate card testing.

• Login Security: Preventing brute force attacks by limiting the number of login attempts per account or IP address.

• E-Commerce: Identifying suspicious bulk purchases that exceed typical user behavior.

Fraudulent Use Cases

• Card Testing Fraud: Fraudsters test stolen credit card details by making numerous small transactions in a short period.

• Credential Stuffing: Automated tools repeatedly test username and password combinations to gain unauthorized access.

• Promo Abuse: Exploiting promotional offers by creating multiple accounts and performing high-frequency actions to redeem offers.

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Impacts on Businesses

Positive Impacts

• Fraud Prevention: Velocity checks block abnormal activity before it can escalate into financial or operational damage.

• Cost Reduction: By identifying suspicious patterns early, businesses save on fraud losses and chargeback fees.

• Improved Security: Enhances overall system integrity by detecting and deterring automated attacks like bots.

Negative Impacts

• False Positives: Legitimate users performing high-frequency actions (e.g., during sales events) may be flagged incorrectly.

• User Experience Challenges: Overly aggressive thresholds can inconvenience legitimate customers, leading to frustration or drop-offs.

• Adaptation by Fraudsters: Fraudsters may adjust their methods to evade detection by mimicking normal behavior patterns.