The Tor anonymizing network has proven itself to be highly beneficial for whistleblowers, political activists, and other risky but cause-worthy activities.  Unfortunately, the allure of anonymity has also paved the way for shady activities to go unnoticed – with child pornographers and Black Market dealers apparently doing an extremely brisk business, all thanks to the anonymity that Tor provides.

Tor allows people to anonymously browse the internet by redirecting web traffic along hard-to-follow routes and assigning web users a random IP address that can change at any time. This helps in masking users’ true geolocation, as well as the IP addresses of their Internet-connected devices.

If you’re a whistleblower or a political activist, using Tor will help you hide out while still be able to leak evidence or report on government abuses.  Unfortunately, the same privileges are on offer to unscrupulous individuals.  There’s no ifs or buts.

According to Tor metrics, more than 1.5 million people use Tor every day as of early September 2013, up from 500,000 a day in early August 2013, and about 30 percent of transactions or activities in the network are believed to be fraudulent.

iovation, a company that specializes in online fraud prevention, discovered that 30.2 percent of transactions carried out on the Tor network, including online purchases, account registrations, credit applications, logins, wire transfers, comments, were fraudulent during last August.

iovation used the new detection capability of its flagship fraud-fighting Reputation Manager 360 service to analyze more than 240 million transactions conducted in August 2013, which originated from some 1.5 billion devices that it has in its device reputation database. iovation was able to identify transaction that took place over Tor by leveraging technology it developed to correlate transactions to IP addresses that are a part of the network.

Cybercriminals are always looking for ways to fly under the radar,” said Scott Waddell, Chief Technology Officer at iovation.

“While Tor on its surface appears to be for the greater good, it is disproportionately used for fraudulent and abusive transactions. Of note, Tor use more than doubled in August, likely due to a massive botnet leveraging Tor for command and control communications.”

Scott Olson, iovation’s VP of product, further stated in an interview that Tor in itself is not a bad service as it can be used for positive things. But unfortunately, that doesn’t stop people from using its cloak of anonymity to commit fraudulent acts.  Also, this isn’t the first time Tor has been branded as a crook’s paradise.  In August, the Federal Security Service of the Russian Federation contemplated blocking access to Tor, claiming it was being utilized by “weapon traffickers, drug dealers and credit card fraudsters.”

The new feature utilized by iovation to uncover fraudulent transactions in Tor is now available free of charge for customers of iovation’s ReputationManager 360. It leverages current and past device behavior intelligence to stop fraud.  This intelligence allows iovation to stop more than 200,000 fraud attempts daily, pro-actively identifying devices that are associated with abuse and stopping bad actors before they can strike.