Credit card fraud prevention system and method using secure electronic credit card

• US 20030208449A1
• Filed: 05/06/2002
• Published: 11/06/2003
• Est. Priority Date: 05/06/2002
• Status: Abandoned Application

• Current Assignee: Yuanan Diao
• Original Assignee: Yuanan Diao
• Inventors: Diao, Yuanan
• Application Number:
  US10/138,863
• Publication Number:
  US 20030208449A1
• Time in Patent Office: Days
• US Class Current: 705/67
• CPC Class Codes: G06Q 20/341 Active cards, i.e. cards including their own processing means, e.g. including an IC or chip
• CPC Class Codes: G06Q 20/3415 Cards acting autonomously as pay-media
• CPC Class Codes: G06Q 20/3674 involving authentication
• CPC Class Codes: G06Q 20/40975 using encryption therefor
• CPC Class Codes: G07F 7/1008 Active credit-cards provided with means to personalise their use, e.g. with PIN-introduction/comparison system
• CPC Class Codes: G07F 7/1016 Devices or methods for securing the PIN and other transaction-data, e.g. by encryption arrangements for secret communication, see H04L9/00

Abstract

A coding and deciphering system is used to prevent fraudulent credit card transactions. The traditional plastic credit card is replaced by an electronic credit card that may look like a credit card sized calculator. The electronic credit card is password protected. After activated by entering the correct password, it turns the data of a transaction into an enciphered code uniquely associated to that transaction. Such an enciphered code must accompany the un-coded transaction data for each transaction. The computer of the credit company deciphers this code by using the information stored in the authorized user'"'"'s account. The deciphered code is used to compare with the un-coded transaction data. The transaction is authorized if a match is found, otherwise the transaction is denied. The extremely high level of security this method provides will make most credit card fraud impossible.

Claims

1. A system for authorizing a credit card transaction, comprising:

a method in which coding algorithms are used to produce unique enciphered codes tied to specific transactions that can only be deciphered by using information stored in the user'"'"'s account;

an electronic credit card comprising;

an enciphering program utilizing the method above, a communication port, a keypad and a screen, and other security, convenience programs and features;

a main computer used for credit card transaction authorization, equipped with a deciphering program capable of deciphering secret codes produced by an electronic credit card;

a random number generator;

a database where the user information, including the user account number, the de-ciphering key data, is stored;

a retrieval means for the main computer to access the user account information from the database;

a communication means between the computer used for authorizing transactions and an electronic credit card;

a method in which more than one positive integers are used to define a unique enciphering algorithm and its corresponding deciphering algorithm;

a set of randomly generated numbers for each user account, stored in that user'"'"'s account and his/her electronic credit card;

a password comprising certain number of digits that is required to activate the user'"'"'s electronic credit card;

means to deliver the password to the user with confirmation requested;

means to deliver the electronic credit card to the user upon the user'"'"'s confirmation on receiving the password;

4. A system for authorizing a credit card transaction as recited in claim 1, wherein the method used to produce unique enciphered codes tied to specific transactions that can only be deciphered by using information stored in the user'"'"'s account comprising the steps of:

generating a set of random whole numbers;

defining a function that associates one or more numbers in the above set to a enciphering algorithm that enciphers a whole number of certain digits into another whole number;

defining a function that associates the date of the transaction and the sequential number of the transaction (meaning the number of transaction the user has made using that electronic credit card including that transaction) to one or more numbers in the set created above in a non-repetitive way;

combining the last two functions to define the enciphering program and taking the inverse of it to define the deciphering program.

5. A system for authorizing a credit card transaction as recited in claim 1, wherein the transaction authorizing method comprising the following steps:

generating a set of random whole numbers for each user;

storing these numbers in the user'"'"'s account on the database;

storing these numbers in the user'"'"'s electronic credit card;

installing the deciphering program defined in claim 4 on the authorizing computer;

installing the enciphering program defined in claim 4 on the user'"'"'s electronic credit card;

the electronic credit card enciphering the transaction data using its coding program defined above;

the authorizing computer retrieving the deciphering information from the user'"'"'s account;

the authorizing computer deciphering the enciphered code encoded by the electronic credit card;

the authorizing computer comparing the decoded result to that of the un-coded transaction code for a match;

the authorizing computer rejecting the transaction if the transaction sequential number of that day has been used;

the authorizing computer rejecting the transaction if a match is not found.

the authorizing computer approving the transaction if the transaction sequential number of that day has not been used and a match is found;

storing the sequential number of the said transaction in the user'"'"'s account.

6. An electronic credit card as recited in claim 1, wherein said security features comprising some or all of the following:

the electronic credit card requiring user authentication for each transaction, whether the transaction is automated by a card reader or is manually made by data input through the keypad on the electronic credit card;

the electronic credit card shutting off its transaction mode automatically after a period of time when activated but left idling;

the electronic credit card creating enciphered codes uniquely tied to specific transactions using non-repeating coding algorithms;

the electronic credit card disabling itself after a consecutive number (preset by the credit card company) of invalid password entries;

7. An electronic credit card as recited in claim 1, wherein said convenience features comprising some or all of the following:

the electronic credit card having more than one slots for housing an electronic credit card chip so that it can be used as more than one credit card;

the electronic credit card having a menu on its screen showing the choices of different credit cards on it (when applicable);

the electronic credit card having all the basic features of a calculator which can be used without having to enter the transaction mode;

the electronic credit card having a “

temporary password”

option in which the user may substitute the permanent password by a temporary, shorter password after entering the correct permanent password first;

the electronic credit card automatically shutting off its temporary password option mode after the time period specified by the user elapses;

the electronic credit card automatically shutting off its temporary password option mode if the number of transactions exceeds the limit specified by the user;

the electronic credit card automatically shutting off its temporary password option mode if the total dollar amount of the transactions exceeds the limit specified by the user;

the electronic credit card automatically shutting off its temporary password option mode if the number of consecutive failed password entering attempts exceeds the pre-specified number set by the user;

2. A method for authorizing a credit card transaction, comprising the steps of:

user activating the electronic credit card by entering the correct password prior to transaction;

user entering the transaction data to the electronic credit card, either through a communication device such as a modified credit card reader compatible with the electronic credit card, or through the keypad of the electronic credit card;

the electronic credit card recording the said transaction in its memory, counting the total number of transactions made in that day, choosing an enciphering algorithm with that information, enciphering the transaction data and returning a secret code that includes the sequential number of the said transaction;

the credit card reader transmitting the enciphered code, the credit card account number and plain transaction data to the authorizing computer;

the authorizing computer receiving the enciphered code and the user'"'"'s account number, plain (un-coded) transaction data from the electronic credit card, either through the electronic credit card reader or through other means;

the authorizing computer accessing the database and retrieving the information needed to run the deciphering program from the user'"'"'s account;

the authorizing computer deciphering the enciphered code using its deciphering program and comparing the result with the plain transaction data;

the authorizing computer denying the transaction if a match is not found;

the authorizing computer authorizing the transaction if a match is found and no other transaction is not made in that day with the same sequential number;

the authorizing computer recording the sequential number of the authorized transaction in the user'"'"'s account in that day.

3. The method for authorizing a credit card transaction as recited in claim 2, wherein the electronic credit card must be activated prior to each transaction by entering the correct password.

8. The method for authorizing a credit card transaction as recited in claim 2, wherein the sequential number of a transaction is the total number of transactions, including the said transaction, made on that day using the said electronic credit card;

9. The method for authorizing a credit card transaction as recited in claim 2, wherein the enciphered code produced by an electronic credit card includes the sequential number of the transaction in a way the authorizing computer can read.