Anti-Fraud Credit/Debit Card Authorization System and Method

• US 20070262136A1
• Filed: 01/31/2006
• Published: 11/15/2007
• Est. Priority Date: 01/31/2006
• Status: Abandoned Application

• Current Assignee: Xiaofeng Ou
• Original Assignee: Xiaofeng Ou
• Inventors: Ou, Xiaofeng
• Application Number:
  US11/307,311
• Publication Number:
  US 20070262136A1
• Time in Patent Office: Days
• US Class Current: 235/380
• CPC Class Codes: G06Q 20/04 Payment circuits
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists

Abstract

The invention provides a credit/debit authorization system and method which aim at stopping unauthorized use of credit/debit cards. The authorization system and method takes a two-step authorization approach. When a credit/debit card transaction authorization request is routed to the authorization system, the authorization system first validates the transaction by comparing card and transaction amount information extracted from the transaction to the account information stored in an account database. If the transaction is invalid, the authorization system refuses the transaction. If the transaction is valid, the authorization system then determines if the transaction requires the card user'"'"'s approval. If it does, the authorization system would look up for user contact methods in a user contact database for that card with a pending transaction, establish a communication channel with the card user on his/her personal communication device, inform the user of a pending transaction with transaction related information, ask the user to take appropriate actions to either approve or refuse the transaction and process the user'"'"'s response. If the user approves the transaction, the authorization system sends an approval code back to the device/system which started the transaction authorization request. If the user refuses the transaction, the authorization system sends a refusal code back to the device/system which started the transaction authorization request. In this way, unauthorized use of credit/debit cards can be stopped.

Claims

1. An anti-fraud credit/debit card authorization system, comprising of the following:

a computer system having means of receiving credit/debit card transaction authorization request from transaction request initiators;

wherein transaction request initiators can be card reader devices used by merchants or financial systems capable of initiating transactions related to credit/debit cards;

a first account database having credit/debit card account information;

means of transaction authorization;

wherein transaction authorization is based on credit/debit card and transaction amount information;

a second user contact database having user contact methods associated with credit/debit cards;

means of executing user contact methods;

means of sending credit/debit transaction authorization code back to transaction request initiators.

2. An anti-fraud credit/debit card authorization system according to claim 1, wherein means of transaction authorization is to compare any of the following:

card information, transaction amount extracted from a credit/debit transaction to the credit/debit account information stored in said first account database; and

a) if the card information of a transaction does not match what is stored in said first account database and/or the transaction amount exceeds the account spending limit, the transaction is deemed invalid, said computer system sends a refusal code back to the transaction request initiator, or

b) if the card information of a transaction matches what is stored in said first account database and the transaction amount is less than the account spending limit, the transaction is deemed valid, and

c) said computer system then checks if the transaction meets user contact criteria which are based on any of the following;

transaction amount, transaction type, predetermined user contact policy, resulting in one of the following;

1) if the transaction does not meet user contact criteria, said computer system sends an approval code back to the transaction request initiator, or

2) if the transaction meets user contact criteria, said computer system starts a user contact method procedure.

3. An anti-fraud credit/debit card authorization system according to claim 2, wherein transaction type describes the function of a transaction, which could be credit/debit card charge, cash withdrawal, refund and any other legitimate business activities.

4. An anti-fraud credit/debit card authorization system according to claim 1, wherein user contact method is that said computer system establishes a communication channel with a card user'"'"'s communication device including:

a. cellular phone;

b. two-way paging device;

c. personal communication devices which handle communications in a timely manner.

5. An anti-fraud credit/debit card authorization system according to claim 1, wherein means of executing user contact methods comprising of the following steps:

a) said computer system looks up in said second user contact database for user contact methods for a credit/debit card using credit/debit number as search key directly or indirectly;

b) said computer system establishes a communication channel with the personal communication device of a user whose card has a pending transaction;

c) said computer system informs the card user of a pending transaction on his/her card via voice or text messages with transaction related information including any of;

transaction request initiator identity, transaction amount, transaction type, transaction location, transaction date/time, card information;

d) said computer system via voice or text messages asks the card user to take actions to either approve or refuse the transaction;

e) said computer system processes the user'"'"'s response, and sends either an approval or refusal code back to the transaction request initiator accordingly.

6. An anti-fraud credit/debit card authorization system according to claim 5, wherein when said computer system processes user'"'"'s response and sends either an approval or refusal code back to the transaction request initiator accordingly, said computer system performs one of the following:

1. if said computer system does not receive the card user'"'"'s response in a preset time window, one of the following may occur;

1) said computer system sends a refusal code back to the transaction request initiator, or

2) said computer system looks up for alternate user contact method in said second user contact database and repeats user contact procedure if alternate user contact method is available, or

3) said computer system sends a refusal code back to the transaction request initiator if no alternate user contact method is available;

2. if said computer system receives the card user'"'"'s response in a preset time window and the user approves the transaction, said computer system sends an approval code back to the transaction request initiator, or

3. if said computer system receives the user'"'"'s response in a preset time window, and the user refuses the transaction, said computer system sends a refusal code back to the transaction request initiator.

7. An anti-fraud credit/debit card authorization system according to claim 1, wherein the first account database and second user contact database are either two separate databases or two components of a single database, and are accessible by said computer system.

8. An anti-fraud credit/debit card authorization method, comprising of the following steps

a) A computer system receives a credit/debit card transaction authorization request from a transaction request initiator;

b) said computer system compares any of the following;

card information, transaction amount extracted from the credit/debit transaction to what is stored in a first credit/debit card account database which is accessible by said computer system;

c) if card information of the transaction does not match what is stored in said first account database and/or the transaction amount exceeds the account spending limit, the transaction is deemed invalid, said computer system sends a refusal code back to the transaction request initiator, or

d) if card information of the transaction matches what is stored in said first account database and the transaction amount is less than the account spending limit, the transaction is deemed valid, said computer system then checks if the transaction meets user contact criteria which are based on any of the following;

transaction amount, transaction type, predefined user contact policies;

e) if the transaction does not meet user contact criteria, said computer system sends an approval code back to the transaction request initiator, or

f) if the transaction meets user contact criteria, said computer looks up for user contact methods for the credit/debit card involved in the transaction in a second user contact database which has user contact methods associated with credit/debit cards;

wherein credit/debit card number will be the search key in said second user contact database lookup directly or indirectly, and said second user contact database is accessible by said computer system;

g) said computer system starts a user contact method procedure, asks for the card user'"'"'s concurrence on a pending transaction and processes the user'"'"'s response;

h) if the transaction is refused by the card user, said computer system sends a refusal code back to the transaction request initiator, or

i) if the transaction is approved by the card user, said computer system sends an approval code back to the transaction request initiator.

9. An anti-fraud credit/debit card authorization method according to claim 8, wherein a transaction request initiator is a card reader device used by a merchant or a financial system capable of initiating a transaction related to a credit/debit card.

10. An anti-fraud credit/debit card authorization method according to claim 8, transaction type describes the function of a transaction, which could be credit/debit card charge, cash withdrawal, refund and any other legitimate business activities.

11. An anti-fraud credit/debit card authorization method according to claim 8, wherein user contact criteria are preconditions of starting user contact method procedures, which includes any of the following factors:

a. when the transaction amount of a transaction is larger than a preset amount, or

b. the transaction type of a transaction is credit/debit card charge, or

c. user contact polices set forth by card issuers.

12. An anti-fraud credit/debit card authorization method according to claim 8, wherein a user contact method is a call placed by said computer to a credit/debit card user'"'"'s cellular phone.

13. An anti-fraud credit/debit card authorization method according to claim 8, wherein a user contact method is a communication initiated by said computer system with a card user'"'"'s personal communication device.

14. An anti-fraud credit/debit card authorization method according to claim 8, wherein when said computer system starts a user contact method procedure, asks for the card user'"'"'s concurrence on a pending transaction and processes user'"'"'s response, said computer system performs the following:

a) establishes communication with the credit/debit card user'"'"'s personal communication device;

b) via voice or text messages informs the user of a pending transaction on his/her card with transaction related information including any of;

transaction request initiator identity, transaction amount, transaction type, transaction location, transaction date/time, card information;

c) asks the user to take appropriate actions either approving or refusing the transaction on his/her card;

d) processes the user'"'"'s response, resulting in one of the following;

1) if said computer system does not receive the user'"'"'s response in a preset time window, said computer system sends a refusal code back to the transaction request initiator, or said computer system looks up for alternative user contact method in said second user contact database and repeats user contact procedure if an alternate user contact method is available, or sends a refusal code back to the transaction request initiator if no alternate user contact method is available, or

2) if said computer system receives the card user'"'"'s response in a preset time window and the user approves the transaction, said computer system sends an approval code back to the transaction request initiator, or

3) if said computer system receives the card user'"'"'s response in a preset time window and the user refuses the transaction, said computer system sends a refusal code back to the transaction request initiator.

15. An anti-fraud credit/debit card authorization system, comprising of the following:

a computer system having means of receiving credit/debit card transaction authorization requests from transaction request initiators;

wherein transaction request initiators can be card reader devices used by merchants or financial systems capable of initiating transactions related to credit/debit cards;

a first account database having credit/debit card account information;

means of transaction authorization;

wherein transaction authorization is based on credit/debit card and transaction amount information;

a second user contact database having user contact methods associated with credit/debit cards;

means of executing user contact methods;

means of sending credit/debit transaction authorization code to a transaction request initiator.

16. An anti-fraud credit/debit card authorization system according to claim 15, wherein a user contact method is an approach used by said computer system to establish a communication channel with a credit/debit card user'"'"'s communication device including cellular phone, two-way paging device and other personal communication devices.

17. An anti-fraud credit/debit card authorization system according to claim 15, wherein means of executing user contact methods is that when a credit/debit card transaction meets user contact criteria, said computer system establishes a communication channel with the card user'"'"'s personal communication device, informs the user of a pending transaction on his/her card with transaction related information and asks the user to take appropriate actions to either approve or refuse the transaction;

said computer system processes the user'"'"'s response, and sends either an approval or refusal code back to the transaction request initiator based on the user'"'"'s response accordingly.