Automated payment card fraud detection and location

• US 20060249574A1
• Filed: 04/14/2006
• Published: 11/09/2006
• Est. Priority Date: 12/17/2003
• Status: Active Grant

• Current Assignee: Fitbit, Inc. (Alphabet Inc.)
• Original Assignee: Qsecure Inc.
• Inventors: Brown, Kerry D., Chatelain, Daniel, Pariseau, David Kevin
• Granted Patent: US 7,543,739 B2
• Time in Patent Office: Days
• US Class Current: 235/380
• CPC Class Codes: G06K 19/06187 with magnetically detectable marking
• CPC Class Codes: G06K 19/06196 Constructional details
• CPC Class Codes: G06K 19/07 with integrated circuit chips
• CPC Class Codes: G06K 19/0723 the record carrier comprising an arrangement for non-contact communication, e.g. wireless communication circuits on transponder cards, non-contact smart cards or RFIDs
• CPC Class Codes: G06K 19/12 the marking being sensed by magnetic means
• CPC Class Codes: G06Q 20/12 specially adapted for electronic shopping systems
• 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 20/343 Cards including a counter
• CPC Class Codes: G06Q 20/354 Card activation or deactivation
• CPC Class Codes: G06Q 20/3674 involving authentication
• CPC Class Codes: G06Q 20/4016 involving fraud or risk level assessment in transaction processing
• CPC Class Codes: G06Q 20/403 Solvency checks
• CPC Class Codes: G07F 7/082 Features insuring the integrity of the data on or in the card
• CPC Class Codes: G07F 7/1008 Active credit-cards provided with means to personalise their use, e.g. with PIN-introduction/comparison system

Abstract

A payment card fraud detection business model comprises an internal virtual account number generator and a user display for Card-Not-Present transactions. Card-Present transactions with merchant card readers are enabled by a magnetic array internally associated with the card'"'"'s magnetic stripe. The internal virtual account number generator is able to reprogram some of the magnetic bits encoded in the magnetic stripe to reflect the latest virtual account number. The internal virtual account number generator produces a sequence of virtual numbers that can be predicted and approved by the issuing bank. Once a number is used, such is discarded and put on an exclusion list or reserved for a specific merchant until the expiration date. A server for the issuing bank logs the merchant locations associated with each use or attempted use, and provides real-time detection of fraudulent attempts to use a virtual account number on the exclusion list. Law enforcement efforts can then be directed in a timely and useful way not only where the fraud occurs but also at its origination.

Claims

1. A method for preventing payment card fraud, the method comprising:

issuing to users a payment card able to internally generate a new account number on a magnetic stripe each time such is to be used;

connecting a merchant card reader or ATM to read said magnetic stripe on said payment card, and to report said new account number when a user initiates a merchant transaction;

analyzing a report from said merchant card reader to determine if said new account number is valid or an attempt at fraud as evidenced by a second attempt to use the same account number in a different subsequent transaction;

logging into a database a merchant identification data associated with each said report from said merchant card reader; and

deciding whether to authorize said merchant transaction based on a validity criteria associated with said new account number.

2. The method of claim 1, further comprising:

mining said database for evidence of fraudulent payment card use; and

reporting data for law enforcement efforts which identify said payment card and locations of said merchant card reader.

3. The method of claim 1, further comprising:

mining said database for evidence of fraudulent payment card use; and

disabling said payment card from being able to initiate any further merchant transactions.

4. The method of claim 1, further comprising:

mining said database for evidence of fraudulent payment card use; and

disabling said payment card from being able to initiate any further merchant transactions or partially disabling payment card for new merchants only.

5. The method of claim 1, further comprising:

activating a timer on each said payment card after a card transaction, and causing a next transaction number to be skipped resetting a new count when such timer times-out; and

preventing copies of magstripe data from being accepted in a decision making process to authorize the transactions after a fixed period of time.

6. A payment card system, comprising:

a payment card configured to internally generate a new account number on a magnetic stripe each time such is used in a merchant or ATM magnetic card reader;

a payment processing server configured to analyze a report from said merchant card reader to determine if said new account number is valid or an attempt at fraud;

a database of merchant identification data associated with each said report from said merchant card reader; and

a program for deciding whether to authorize said merchant transaction based on a validity criteria associated with said new account number.

7. The payment card system of claim 6, further comprising:

a merchant card reader for reading said magnetic stripe on said payment card, and for reporting said new account number when a user initiates a merchant transaction.

8. The payment card system of claim 6, further comprising:

a device for mining said database for evidence of fraudulent payment card use; and

a report data to enable law enforcement efforts in real-time which identify said payment card and locations of said merchant card reader.

9. The payment card system of claim 6, further comprising:

means for mining said database for evidence of fraudulent payment card use; and

means for disabling said payment card from being able to initiate any further merchant transactions.

10. The payment card system of claim 6, further comprising:

a device for mining said database for evidence of fraudulent payment card use; and

a report data providing for law enforcement efforts in real-time or batch that identify said payment card and locations of said merchant card reader, and that identify when and where a fraudulent transaction was originated.

11. A business model for reducing credit card fraud, comprising:

cryptographically generating a series of unique values from user account access numbers and storing them as sets in corresponding private crypto-tables in a plurality of credit cards;

deploying said plurality of credit cards in the retail community that each can modify its own magnetic stripe with values obtained from said private crypto-tables to result in a complete magnetically recorded transaction number that can only be authorized by a payment server once;

installing a fraud detection program on said payment server that can compute from said user account access numbers a next set of unique values that would have been validly stored in each of said crypto-tables; and

selling to subscribers a report service connected to the fraud detection program that is able to detect and announce the merchant location of a skimming event and attempt at fraud.