Following are some of the examples where fraudsters use the proxies to hide their actual IP.
Credit Card Frauds
Anonymous IP's are used for credit card frauds,such as cashing out the stolen credit card numbers and stealing the money, When ever a transaction is done from a credit card, the IP address of the computer from where the transaction is made is captured by the Credit card providers, So if the hacker or Fraudster is cashing out from his original location, he will be easily be traced.
So to avoid it the Hacker or Fraudster would use a proxy in order to hide his original location and the spoofed IP will be captured by the Credit card providers
Bypassing Restriction
In most offices or schools websites like Facebook, orkut etc and other websites are blocked so people use proxy to bypass the restrictions and unlock the websites
Accessing hacked accounts
In Email service providers like gmail you can find the real IP Address from which you accessed the accounts previously, Say if a hacker has hacked some one's Gmail account and he is monitoring the hacked account, If he will login without a proxy, his real IP will be captured and therefore he will be traced
Proxy Detection Servies
Now a days proxy detection has became a critical component, There some services like Fraud labs and Free Proxy Detector to detect the usage of proxy or spoofed IP from users participating onlineHow Proxy Detection works?
Proxy detection services mostly rely on IP addresses to determine whether or not the IP is a proxy, they keep a record of the IP's which most proxy's use as a Spoofed IP and therefore by comparing the IP with the list of flagged IP's they could find that the IP is a proxy or not, If the IP is not on the list then it is authenticated and the confirmation is sent back to the merchant. Otherwise it is reported to be a suspected proxy.
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