This article explains practical fraud prevention strategies for digital products, including authentication, identity verification, suspicious account detection, custom blocklists, and forced password resets.
Key Takeaways:
- Fraud prevention should be considered from the early stages of product development, especially for applications that process payments or other sensitive transactions.
- Authentication and verification measures, such as 2FA, MFA, phone verification, and ID verification, can help reduce unauthorized access and strengthen application security.
- Additional protection can be introduced through geoblocking, phone blocklists, account blocking or suspension, and monitoring shared data across accounts for signs of suspicious activity.
- Anti-fraud solutions can combine widely used tools with custom mechanisms tailored to an application’s functionality and potential vulnerabilities.
- No anti-fraud strategy provides complete protection, but appropriate measures can help detect and mitigate attacks faster and reduce their potential financial impact.
Why Implementing Anti-Fraud Measures is Crucial For You App
Today, most IT products need an anti-fraud strategy and at least basic prevention measures, as fraudulent activity in its various forms has become a persistent threat to applications security. This claim is supported by the latest statistical findings: the 2026 Cybercrime Report by LexisNexis Risk Solutions reveals that global fraud attack rates increased by 8%, with growth driven partly by attacks affecting ecommerce and other digital sectors.
Implementing fraud prevention measures requires additional resources, which can sometimes cause teams to postpone this critical aspect of app development. However, neglecting these measures can result in significantly higher costs and financial losses if the app becomes vulnerable to fraudulent activity.
Applications that process payments particularly need strong anti-fraud protection. For example, UK Finance reports nearly 3.2 million cases of remote purchase fraud in 2025, up 13% from the previous year. If an app repeatedly falls victim to fraud, the resulting losses can far outweigh the cost of implementing preventive measures. Ultimately, anti-fraud tools become necessary in such applications to address this ongoing threat.
That is why incorporating a fraud prevention strategy from the very beginning should be a vital part of product development.
Fraud Prevention Solutions for Apps At A Glance
There’s no universal fraud prevention setup that works for every app. Based on our experience implementing and testing anti-fraud solutions in ecommerce, finance, healthcare, and other industries, we’ve grouped the most widespread tools into the table below, with each one discussed in more detail later in the article. These tools primarily focus on various forms of user authentication and verification within the app.
| Solution | What It Does | Example Tool |
|---|---|---|
| Two-factor authentication (2FA) | Requires a password + one OTP via SMS, email, or app | Google Authenticator, Microsoft Authenticator |
| Multi-factor authentication (MFA) | Requires two or more factors: PIN, security key, or biometrics | Amazon Cognito, Okta, Ping Identity |
| Failed attempt lockouts | Blocks/suspends accounts after repeated failed logins | Amazon Cognito, Twilio |
| Location-based alerts | Emails user when login is from an unfamiliar location | Amazon, Cognito |
| Phone verification | Confirms identity via phone, at signup, or later | Custom-built |
| Geoblocking by call prefix | Blocks/allows by country calling code, not IP | Custom-built |
| VoIP restriction | Blocks VoIP numbers commonly used by fraudsters | Custom-built |
| ID verification | Document checks for high-trust or sensitive actions | Stripe, Persona |
| Phone blocklist | Flags/blocks numbers manually or by rule (e.g. card fraud) | Custom-built |
| Account blocking & suspension | Suspends/blocks accounts, automatically or manually by admin | Custom-built |
| Shared account data detection | Flags accounts sharing a card, IP, address, or cards | Custom-built |
| Forced reset & logout | Logs out and resets password for one or all users | — |
Fraud Prevention at Sign In and Sign Up
A wide range of software tools is available today to help secure the user authentication process. These tools may differ in how they are integrated, but they serve the same purpose: to protect the system, prevent unauthorized access to accounts, and require an additional verification step before a user is granted access to the app.
The most widely used methods for enhancing authentication security are two-factor authentication (2FA) and multi-factor authentication (MFA).
Two-Factor Authentication (2FA)
2FA requires exactly two forms of identity verification, while MFA can involve two or more. The second verification step in 2FA may vary, but the most widely used options include one-time password (OTP) codes via SMS or email, generated by an authenticator app.
A one-time password (OTP) code is a unique, temporary code generated for a login session. As it can only be used once, an OTP is an effective way to protect an account against attacks resulting from password leaks. Its short expiration period further strengthens authentication security.
Multi-Factor Authentication (MFA)
MFA can be based on:
information known only to the user, such as an additional PIN code, codes sent via email or SMS, authenticator codes, or the answer to a security question;
something that only the user has, like a physical security key or smart card;
biometric data, such as fingerprints, facial or voice recognition, or iris scan.
Today, many tools can be used to implement 2FA and MFA, including Amazon Cognito, Google Authenticator, Microsoft Authenticator, Ping Identity, Okta, and Twilio.In fintech software development, MFA is often treated as a baseline requirement rather than an optional layer.
Multiple Login and Registration Attempts Prevention
Another effective security measure built into the login or registration process is blocking or suspending accounts after multiple failed sign-up or sign-in attempts. For example, Twilio offers tools that automatically block fraudulent phone numbers or suspicious traffic spikes to prevent automated attacks. Amazon Cognito implements temporary account lockouts after multiple failed sign-in attempts, thereby strengthening protection against unauthorized access.
Location-Based Security Alerts
One of the security features offered by Cognito is notifying users whenever a login occurs from a new or unfamiliar location. This type of activity is treated as potentially suspicious, and an email is sent to the user with details about the sign-in attempt, including the location, device information, and date and time of access. If the user does not recognize the activity, they can immediately change their password and report the incident as potentially fraudulent.
Phone Number-Based Solutions
Verification of Phone Number
Although phone verification is often integrated into the sign-up or sign-in process (when the user’s phone number is used to receive OTP codes, as described above), it can also be required at later stages of app usage. For example, users might be allowed to explore the app’s features before completing verification, allowing them to see what the app offers without interrupting their initial experience. In this case, phone verification would be required only after several trial uses of the app’s functions.
Geoblock By Call Prefix
While phone verification is an effective method for preventing fraud, it’s important to recognize that the one-time password delivery process itself can also be targeted. Fraudsters may initiate large volumes of SMS requests to generate revenue from these messages. Firsthand experience with such attacks demonstrates that these anti-fraud measures must be reinforced with additional security steps to effectively protect the system**.**
That’s why phone verification can be combined with additional security measures such as geoblocking. It does not always have to rely on IP addresses, as IP-based restrictions can be easily bypassed using a VPN. Instead, geoblocking can be based on country-calling codes, allowing registration to be blocked for numbers with or without specific calling prefixes. This can strengthen security when fraudulent attacks are traced to one or several countries where the application is not normally used.
If a specific number needs to be exempted from the geoblock, it can be added to a whitelist, allowing it to be used for registration and login.
VoIP numbers restriction
Phone numbers can also be filtered by type, for example, by blocking VoIP numbers, which are commonly used by fraudsters. While this may be inconvenient for users who prefer to use VoIP numbers for their accounts, the security benefits far outweigh the drawbacks. As a result, blocking VoIP numbers is considered a recommended practice for enhancing application security.
ID Verification
To improve application security, proper user identification can be enforced through ID verification. For this purpose, tools like Stripe and Persona can be integrated in the app.
Requiring all users to pass ID verification may not be user-friendly since many prefer not to share personal identification details. However, some applications give users access to features that demand a higher level of trust or involve sensitive transactions. In such cases, implementing additional identification measures helps confirm that users are legitimate and protects the platform from fraud.
Application-Specific Solutions
Phone Number Blocklist: Manual and Automatic Blocking
In addition to the widely used, adaptable tools mentioned above, some fraud prevention solutions can be custom-built and modified for specific applications. Among such solutions is a phone blocklist system, which provides a quick and efficient way to stop fraud attempts.
Phone numbers can be added to the blocklist either manually or automatically, based on predefined rules and detection patterns in the latter case. This flexible approach allows for real-time response to emerging threats and helps maintain the integrity of the application.
Manual addition. If a user shows suspicious activity, an admin can add their phone number to the blocklist. After being added, the user may still be able to log in to their account but can be blocked from billing-related actions, such as purchase attempts.
Automatic addition. A user’s phone number can be added to the blocklist automatically in predefined cases, for example:
- when a user makes multiple attempts to top up their balance within a short period of time, these attempts are considered suspicious, as this is not regular user behavior;
- when a user attempts to make a payment with a credit card considered potentially fraudulent:
– transactions made using the card were subject to a dispute;
– transactions made using the card were placed under review and canceled;
– transactions made using the card were reported as fraudulent by the cardholder.
Account Blocking and Suspension
The cases described above can trigger automatic account blocking or suspension, with the user’s phone number added to the blocklist.
In addition to automated actions, an admin can manually block or suspend users. This manual control is especially valuable when immediate action is needed to prevent further fraudulent activity. When an admin blocks or suspends an account, they can specify the reason for the action, along with relevant details. This information provides clear context and a record of administrative decisions.
Fraud Detection Through Shared Account Data
Fraud prevention for apps can also rely on signals derived from data shared across multiple accounts:
Shared card fingerprints. If the same credit card is added to different accounts, these accounts can be flagged as suspicious and displayed in a list in the admin app, allowing an admin to review users with the same credit cards. If any signs of fraudulent behavior are detected, the admin can suspend or permanently block the user.
Shared IP. If multiple accounts are created from the same IP address, these accounts can also be displayed in the admin list. As with fingerprints, an admin can review the activity of users with the same IP address and suspend them in case of fraudulent behavior.
Shared address. If an app allows users to save an address and the same address is associated with different accounts, these accounts also can be highlighted for further review.
Multiple credit cards. If multiple credit cards are added to one billing account, the account can be flagged as suspicious so that an admin can review the users, the added credit cards, and related transactions.
There are numerous reasons to classify an account as suspicious and suspend it temporarily or block it permanently. Other shared-data signals can also support fraud detection and prevention, depending on the app’s purpose and potential vulnerabilities.
Forced Password Reset and Logout
In addition to standard security enforcement practices, forced password reset and forced logout can be used in critical situations. These measures are particularly effective in scenarios like account hacking, where a rapid response is essential to handle the situation effectively and protect the platform and its users.
Individual forced reset can be applied to a specific user whose account is associated with suspicious or fraudulent activity. When an admin initiates a forced password reset, the user is immediately logged out, and their old password is invalidated, preventing further unauthorized access.
Global forced reset is used in more serious cases, such as a widespread hacking attempt. The combination of forced password reset and forced logout can be applied to all users. In this case, they are logged out and required to change their passwords. Although this strategy may not seem user-friendly at first glance, in critical circumstances, restoring user security quickly takes priority over convenience, especially when the exact number of hacked accounts is unclear.
Conclusion
Implementing a fraud prevention strategy is essential for strengthening application security as fraud remains a persistent and serious threat.
Fraud prevention measures vary in scope and implementation. App security can be enhanced by widely used tools like two-factor and multi-factor authentication, phone and ID verification, blocklists, forced password resets, and forced logout. Custom solutions can be designed specifically for an app, taking into account its unique features and potential vulnerabilities.
Although implementing anti-fraud measures does not guarantee complete immunity from attacks, it significantly reduces both their likelihood and potential impact. With proper tools in place, fraudulent activities can often be detected and mitigated quickly, minimizing financial losses and safeguarding the app’s security.
Thus, integrating anti-fraud solutions from the earliest stages of product development is a proactive approach to creating a stable, secure application.
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