METHOD AND SYSTEM FOR DETECTING FRAUD

• US 20090265211A1
• Filed: 06/25/2009
• Published: 10/22/2009
• Est. Priority Date: 07/13/2000
• Status: Active Grant

• Current Assignee: PayPal, Inc. (PayPal Holdings, Inc.)
• Original Assignee: Ian Flint, Jason W. May
• Inventors: May, Jason W., Flint, Ian
• Granted Patent: US 8,548,858 B2
• Time in Patent Office: Days
• US Class Current: 705/9
• CPC Class Codes: G06Q 20/02 involving a neutral party, e.g. certification authority, notary or trusted third party [TTP]
• 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
• 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: G06Q 30/04 Billing or invoicing
• CPC Class Codes: G06Q 30/0619 Neutral agent
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: G07G 3/003 Anti-theft control theft alarms G08B13/00

Abstract

A system and method for detecting fraud when facilitating a payment transaction over a global wide area network. The method comprises receiving a sale information, receiving a payment information from a buyer, and analyzing a transaction information for fraud. If the analyzing indicates fraud, an enhanced transaction information is communicated to a human for fraud analysis. In one embodiment, the method comprises performing rule-based analyses to determine whether the transaction appears to be fraudulent. Rule-based analyses may include suspect data rules and velocity rules. Velocity rules generally determine whether there has been excessive activity that may lead to a conclusion that the transaction may be fraudulent. Suspect data rules are used to determine whether the billing, shipping, selling addresses, telephone numbers, and account numbers, and other data are in a syntactically correct format and whether they exist. In one embodiment, the method further comprises performing simple screening of the transaction information. In one embodiment, the method further comprises seeking approval from a third party such as a financial institution based on the payment information. The method may be implemented as part of a system that includes personal computers, server computers, and other personal computing devices, some of which may communicate over the Internet, and others which may communicate via dedicated communication lines.

Claims

1. A computer-implemented method executed by a server, the method comprising:

receiving, by the server, payment information from a buyer of a product and the payment information includes a buyer email address for the buyer;

receiving, by the server, sale information pertaining to a sale of the product from a seller, the sale information includes a seller email address for the seller;

determining, by the server that a financial institution of the buyer has requested additional information before the sale is complete, the financial institution provides a payment for the sale from a buyer account at the financial institution;

issuing, by the server, email messages to the buyer and the seller using the buyer email address and the seller email address requesting clarifying information to clarify a request of the financial institution; and

obtaining, by the server, approval from the financial institution to take the payment from an account of the buyer at the financial institution and credit the account of the seller at another financial institution once the financial institution of the buyer is satisfied with the clarifying information.

2. The method of claim 1, wherein determining further includes performing, by the server, fraud analysis against the payment information and the sale information to resolve whether the sale is a fraudulent transaction.

3. The method of claim 2, wherein determining further includes, determining, by the server, whether a buyer name associated with the buyer or a seller name associated with the seller is on a list of known fraudulent users.

4. The method of claim 2, wherein determining further includes, determining, by the server, whether the buyer email address or the seller email address is on a list of known fraudulent users.

5. The method of claim 2, wherein determining further includes, performing, by the server, rule-based analysis that generates a score for the sale and in response to the score determines whether the sale is the fraudulent transaction.

6. The method of claim 2 further comprising:

placing, by the server, the sale on hold pending; and

notifying, by the server, the buyer and seller, via the buyer email address and the seller email address, that the sale is being investigated and is on hold pending a fraud investigation when the server resolves that the sale is potentially the fraudulent transaction.

7. The method of claim 6, wherein notifying further includes sending a notice to a human fraud investigator via an email address for the human fraud investigator to initiate the fraud investigation for the sale.

8. A computer-readable medium having instructions stored thereon and adapted to be executed by a server machine of a network, comprising:

acting as an intermediary between a buyer financial institution and a seller financial institution during an online sale on behalf of a buyer and a seller;

analyzing sale and payment information to determine whether the online sale is a fraudulent transaction;

debiting a buyer account at the buyer financial institution when the sale is determined to be legitimate; and

crediting a seller account at the seller financial institution when the sale is determined to be legitimate.

9. The computer-readable medium of claim 8 having further instructions for requesting additional information from the buyer or seller via email addresses associated with the buyer or seller when requested to do so by the buyer financial institution or the seller institution and providing that additional information to the buyer financial institution or the seller financial institution.

10. The computer-readable medium of claim 8 having further instructions for placing the online sale on hold pending a complete fraud investigation when the fraudulent transaction is determined to be present.

11. The computer-readable medium of claim 8 having further instructions for notifying the buyer via the buyer email address and the seller via the seller email address when the fraudulent transaction is determined to be present.

12. The computer-readable medium of claim 8 having further instructions for executing the instructions on the server over the Internet in connection with an online auctioning site where the online sale takes place.

13. The computer-readable medium of claim 8, wherein the acting instructions further include recognizing the buyer account as a bank account or credit card account.

14. The computer-readable medium of claim 8, wherein the analyzing instructions further include scoring sale and payment information independent of the buyer financial institution and the seller financial institution to determine whether the online sale is the fraudulent transaction.

15. A system, comprising:

a server; and

a payment facilitator implemented in a computer-readable medium and to execute on the server;

wherein the payment facilitator is configured to act as an intermediary between a buyer having a buyer financial institution and a seller having a seller institution for an online sale of a product or service offered over the Internet, and the payment facilitator performs an independent fraud analysis of the online sale that is independent of the buyer financial institution and the seller institution, and the payment facilitator is further configured to iteratively interact with the buyer and the seller via email communications while performing the fraud analysis and acting as the intermediary.

16. The system of claim 15, wherein the seller financial institution is configured to be managed via the server.

17. The system of claim 15, wherein payment facilitator is configured to perform the independent fraud analysis via payment information supplied by the buyer and sale information supplied via the seller.

18. The system of claim 15, wherein payment facilitator is configured to send an email invoice to an email address of the buyer in response to the sale.

19. The system of claim 15, wherein the payment facilitator is configured to request clarifying information from the buyer or the seller via a buyer email address and/or via a seller email address when requested to do so by the buyer financial institution and/or the seller financial institution.

20. The system of claim 15, wherein the payment facilitator is configured to perform the independent fraud analysis by comparing information included in payment information supplied by the buyer and additional information included in seller information supplied by the seller against lists of known fraudulent information.