Tiered processing method and system for identifying and mitigating merchant risk

• US 20020120559A1
• Filed: 02/26/2001
• Published: 08/29/2002
• Est. Priority Date: 02/26/2001
• Status: Active Grant

• Current Assignee: First Data Corporation (Fiserv Incorporated)
• Original Assignee: First Data Corporation (Fiserv Incorporated)
• Inventors: OʼMara, Timothy L., Marques, Amy, Luna-Victoria, Margot, Martell, Patricia A.
• Granted Patent: US 7,620,592 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method for identifying merchant risk includes collecting data elements for a plurality of merchants; automatically performing a first level process using the data elements so as to identify a first subset of merchants for review; automatically performing a second level process so as to collect additional information for the first subset of merchants; and automatically performing a third level process using the first subset of merchants and the additional information so as to identify a second subset of merchants requiring further review. A system for practicing the method is also disclosed.

Claims

1. A method for identifying merchant risk, the method comprising:

collecting data elements for a plurality of merchants;

automatically performing a first level process using the data elements so as to identify a first subset of merchants for review;

automatically performing a second level process so as to collect additional information for the first subset of merchants; and

automatically performing a third level process using the first subset of merchants and the additional information so as to identify a second subset of merchants requiring further review.

2. The method of claim 1 wherein the step of automatically performing a first level process includes applying at least one detection rule to the data elements so as to identify the first subset of merchants.

3. The method of claim 1 wherein the step of automatically performing a first level process includes applying at least one watchlist rule to at least one of the data elements.

4. The method of claim 1 wherein the step of automatically performing a first level process includes determining a rule score for each merchant identified in the first subset of merchants.

5. The method of claim 1 wherein the step of automatically performing a first level process includes determining a risk score for each merchant identified in the first subset of merchants.

6. The method of claim 1 wherein the step of automatically performing a second level process includes applying at least one trigger rule to the first subset of merchants so as to selectively identify merchants for which external scoring is to be obtained.

7. The method of claim 1 wherein the step of automatically performing a second level process includes applying at least one trigger rule to the first subset of merchants so as to selectively identify merchants for which multiple credit card re-authorizations are to be obtained.

8. The method of claim 1 wherein the step of automatically performing a third level process includes applying at least one elimination rule to the first subset of merchants and the additional information so as to identify the second subset of merchants.

9. The method of claim 1 wherein the step of automatically performing a third level process includes prioritizing the second subset of merchants.

10. A method for identifying merchant risk, the method comprising:

collecting transaction data elements for a plurality of merchants;

automatically applying a first set of rules to the transaction data elements so as to identify a first list of merchants for review and to determine a rule score for each merchant included in the first list of merchants;

automatically applying a second set of rules to the first list of merchants and associated data elements and rule scores so as to selectively identify merchants for which credit scores are to be obtained;

automatically obtaining a credit score for each selectively identified merchant; and

automatically applying a third set of rules to the first list of merchants and associated data elements, rule scores and credit scores so as to determine a second list of merchants requiring further review.

11. An apparatus for identifying merchant risk, the apparatus comprising:

a computer system configured to periodically receive data elements for a plurality of merchants, the computer system including instructions for performing first level, second level and third level processes so as to identify merchant risk, the computer system being operative to perform the first level process using the data elements so as to identify a first subset of merchants for review, the computer system further being operative to perform the second level process so as to obtain additional information for the first subset of merchants, and the computer system further being operative to perform the third level process using the first subset of merchants and the additional information so as to identify a second subset of merchants requiring further review.

12. The apparatus of claim 11 wherein the computer system includes a host computer and an off-host database in communication with the host computer.

13. The apparatus of claim 12 wherein the host computer includes the instructions for performing the first level process, and the off-host database includes the instructions for performing the second level and third level processes.

14. The apparatus of claim 11 wherein the instructions for performing the first level process include instructions for applying at least one detection rule to the data elements so as to identify the first subset of merchants.

15. The apparatus of claim 11 wherein the instructions for performing the first level process include instructions for applying at least one watchlist rule to at least one of the data elements

16. The apparatus of claim 11 wherein the instructions for performing the first level process include instructions for determining a rule score for each merchant identified in the first subset of merchants.

17. The apparatus of claim 11 wherein the instructions for performing the first level process include instructions for determining a risk score for each merchant identified in the first subset of merchants.

18. The apparatus of claim 11 wherein the instructions for performing the second level process include instructions for applying at least one trigger rule to the first subset of merchants so as to selectively identify merchants for which external scoring is to be obtained.

19. The apparatus of claim 11 wherein the instructions for performing the second level process include instructions for applying at least one trigger rule to the first subset of merchants so as to selectively identify merchants for select credit card re-authorizations are to be obtained.

20. The apparatus of claim 11 wherein the instructions for performing the third level process include instructions for applying at least one elimination rule to the first subset of merchants and the additional information so as to identify the second subset of merchants.

21. The apparatus of claim 11 wherein the instructions for performing the third level process include instructions for prioritizing the second subset of merchants.

22. A computer system for identifying merchant risk, the system comprising:

a host computer for periodically receiving transaction data elements for a plurality of merchants, the host computer including a first set of rules, the host computer being operative to apply the first set of rules to the data elements so as to determine a first list of merchants for review and to determine a rule score for each merchant included in the first list of merchants; and

a database in communication with the host computer for receiving the first list of merchants, as well as associated data elements and rule scores, the database including second and third sets of rules, the database being operative to apply the second set of rules to the first list of merchants and the associated data elements and rule scores so as to selectively identify merchants for which credit scores are to be obtained, the database also being operative to obtain a credit score for each selectively identified merchant, the database further being operative to apply the third set of rules to the first list of merchants and associated data elements, rule scores and credit scores so as to determine a second list of merchants requiring further review.