System and method for detecting fraudulent expenditure of transferable electronic assets

• US 5,872,844 A
• Filed: 11/18/1996
• Issued: 02/16/1999
• Est. Priority Date: 11/18/1996
• Status: Expired due to Term

• Current Assignee: Microsoft Technology Licensing LLC (Microsoft Corporation)
• Original Assignee: Microsoft Corporation
• Inventors: Yacobi, Yacov
• Primary Examiner(s): Cain, David
• Assistant Examiner(s): Sayadian, Hrayr A.
• Application Number:
  US08/751,311
• Time in Patent Office: 820 Days
• Field of Search: 380/23, 380/24, 380/25, 705/39, 705/41, 705/42
• US Class Current: 705/69
• CPC Class Codes: G06Q 20/06 Private payment circuits, e.g. involving electronic currency used among participants of a common payment scheme
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• CPC Class Codes: G06Q 20/108 Remote banking, e.g. home banking
• CPC Class Codes: G06Q 20/29 characterised by micropayments
• 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 20/3678 e-cash details, e.g. blinded, divisible or detecting double spending
• CPC Class Codes: G06Q 20/383 Anonymous user system
• 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
• CPC Class Codes: H04L 2209/56 Financial cryptography, e.g. electronic payment or e-cash
• CPC Class Codes: H04L 9/3247 involving digital signatures
• CPC Class Codes: H04L 9/3263 involving certificates, e.g. public key certificate [PKC] or attribute certificate [AC]; Public key infrastructure [PKI] arrangements network architectures or network communication protocols for supporting authentication of entities using certificates in a packet data network H04L63/0823

Abstract

An electronic asset system includes tamper-resistant electronic wallets that store transferable electronic assets. To break such tamper-resistant wallets, the criminal is expected to spend an initial investment to defeat the tamper-resistant protection. The electronic assets are issued by an institution to a wallet (anonymously or non-anonymously). During expenditure, the electronic assets are transferred from a payer wallet to a payee wallet. The payee wallets routinely submit the transferred assets for possible audit. A fraud detection system samples the assets submitted for audit to detect "bad" assets which have been used in a fraudulent manner. Upon detection, the fraud detection system identifies the electronic wallet that used the bad asset and marks it as a "bad wallet". The fraud detection system compiles a list of bad electronic wallets and distributes the list to warn other wallets of the bad electronic wallets. The list is relatively small since it only contains identities of certificates of bad wallets (and not bad coins) and the certificates have short expiration terms, and hence can be stored locally on each wallet. When a bad wallet next attempts to spend assets (whether fraudulently or not), the intended recipient will check the local hot list of bad wallets and refuse to transact business with the bad wallet.

Claims

1. An electronic asset system comprising:

a plurality of electronic wallets;

a plurality of transferable electronic assets stored on the electronic wallets, the electronic assets being transferred from payer electronic wallets to payee electronic wallets during transactions; and

a fraud detection system to sample a subset of the transferred electronic assets to detect bad assets that have been used in a fraudulent manner, the fraud detection system further identifying the payer electronic wallets that transferred the bad assets.

2. An electronic asset system as recited in claim 1, wherein the electronic wallets are tamper-resistant.

3. An electronic asset system as recited in claim 1, wherein the transferable electronic assets contain identification of all payer electronic wallets that have transferred the electronic assets.

4. An electronic asset system as recited in claim 1, wherein the payer electronic wallets digitally sign the electronic assets when transferred.

5. An electronic asset system as recited in claim 1, wherein each electronic wallet stores a representation of every electronic asset that the electronic wallet receives until the representation expires.

6. An electronic asset system as recited in claim 1, wherein during a transfer of a particular electronic asset from a particular payer electronic wallet to a particular payee electronic wallet, the payer electronic wallet generates a new version of the electronic asset, T_new, for transfer to the payee electronic wallet, the new version T_new being a concatenation of a previous version of the electronic asset, T_old, originally received by the payer electronic wallet and a signed representation of the previous version T_old.

7. An electronic asset system as recited in claim 6, wherein the new version of the electronic asset is as follows:

space="preserve" listing-type="equation">T.sub.new =T.sub.old, S.sub.Kpayer Hash(Payer ID, T.sub.old, time, Payee ID)!

wherein "S_Kpayer " is a signing function using a cryptographic key of the payer electronic wallet and "Hash" is a hashing function used to compute a hash digest of data including an identification of the payer electronic wallet ("Payer ID"), the previous version of the electronic asset T_old, a time of the transfer ("time"), and an identification of the payee electronic wallet ("Payee ID").

8. An electronic asset system as recited in claim 1, wherein the electronic wallets comprise a transmitter to transmit the transferred electronic assets over a network to the fraud detection system.

9. An electronic asset system as recited in claim 1, wherein the fraud detection system compiles a list of the payer electronic wallets identified as transferring bad assets.

10. An electronic asset system as recited in claim 9, wherein the fraud detection system distributes the list of the payer electronic wallets identified as transferring bad assets to warn other electronic wallets.

11. An electronic asset system as recited in claim 9, wherein the list of the payer electronic wallets identified as transferring bad assets is stored on the electronic wallets.

12. An electronic asset system as recited in claim 9, wherein the fraud detection system transmits the list over a network.

13. An electronic asset system as recited in claim 12, wherein the payee electronic wallets are equipped with a receiver to receive transmission of the list.

14. An electronic asset system as recited in claim 1, wherein the fraud detection system compares a newly transferred asset to the assets in the sampled subset to determine whether the newly transferred asset has been transferred from a single payer electronic wallet to multiple payee electronic wallet, the multiple transfers being indicative of fraudulent use on part of the payer electronic wallet.

15. An electronic asset system as recited in claim 1, wherein:

the electronic wallets are associated with particular users and are traceable to those users; and

the fraud detection system further identifies the users associated with the payer electronic wallets that have been identified as transferring the bad assets.

16. An electronic asset system as recited in claim 1, wherein the electronic wallets are issued with temporary certificates that expire on an expiration date.

17. An electronic asset system as recited in claim 1, wherein the payee electronic wallets accumulate the bad assets and when the bad assets on a particular payee electronic wallet reach a bad credit limit, the fraud detection system revokes the particular payee electronic wallet.

18. An early detection and warning system for detecting fraudulent transactions involving transferable electronic assets, individual electronic assets being transferable from a payer electronic wallet to a payee electronic wallet during a transaction, the early detection and warning system comprising:

a sample database; and

a computer programmed to perform the following steps;

store a sample of transferred electronic assets in the sample database;

mark an electronic asset as a bad electronic asset in an event that the electronic asset has been transferred from a single payer wallet to multiple payee wallets; and

identify the payer electronic wallet from which the electronic asset was transferred multiple times as a bad wallet.

19. An early detection and warning system as recited in claim 18, wherein the computer is further programmed to compare the electronic asset with the transferred electronic assets stored in the sample database to discover whether the electronic asset was transferred from the single payer wallet to the multiple payee wallets.

20. An early detection and warning system as recited in claim 18, wherein the computer is further programmed to compile a list of bad wallets.

21. An early detection and warning system as recited in claim 18, further comprising a network connection to an electronic data network, the computer being further programmed to transmit an identity of the bad wallet via the network connection over the electronic data network.

22. An early detection and warning system as recited in claim 18, further comprising a transmitter to broadcast an identity of the bad wallet over a broadcast communication network.

23. An electronic fraud detection system for detecting fraudulent transactions involving electronic assets, the electronic fraud detection system comprising:

an asset issuing unit to issue transferable electronic assets to asset holders, the electronic assets being subsequently transferred from payer asset holders to payee asset holders; and

a fraud sampling unit to evaluate a sampled subset of the electronic assets received by the payee asset holders to detect if the electronic assets have been used in a fraudulent manner.

24. An electronic fraud detection system as recited in claim 23, wherein the issuing unit issues a stick of multiple electronic assets that is digitally signed once by the issuing unit, the asset holders being able to transfer individual ones of the electronic assets to distinct payee asset holders from the stick without transferring the stick as a whole.

25. An electronic fraud detection system as recited in claim 23, wherein the fraud sampling unit identifies the asset holders responsible for fraudulent use of the electronic assets and compiles a list of the identified asset holders.

26. An electronic fraud detection system as recited in claim 25, wherein the fraud sampling unit distributes the list of the asset holders to warn that the identified asset holders have used electronic assets in a fraudulent manner.

27. An electronic fraud detection system as recited in claim 23, wherein the fraud sampling unit evaluates each sampled transferred electronic asset to determine whether the transferred electronic asset has been transferred multiple times from a single asset holder.

28. An electronic fraud detection system as recited in claim 23, wherein:

the asset holders are associated with particular users and are traceable to those users; and

the fraud sampling unit identifies the users associated with the asset holders that are identified as responsible for fraudulent use of the electronic assets.

29. An electronic fraud detection system as recited in claim 23, wherein:

the certificates of asset holders are configured to expire on an expiration date; and

the asset issuing unit issues a new expiration date to an expiring asset holder to permit the asset holder to continue operation after the expiration date.

30. An electronic fraud detection system as recited in claim 29, wherein the asset issuing unit issues the new expiration date for the asset holders'"'"' certificates during a time period in which the asset issuing unit is not issuing electronic assets.

31. An electronic fraud detection system as recited in claim 23, wherein the certificates of the asset holders accumulate the count of fraudulently used electronic assets and the fraud sampling unit revokes the asset holders when a number of fraudulently used electronic assets exceeds a bad credit limit.

32. An electronic asset system, comprising:

an asset issuing unit to issue transferable electronic assets, the electronic assets being digitally signed by the asset issuing unit;

a plurality of asset holders to store the signed electronic assets, each asset holder having an identification certificate containing a cryptographic public key, the certificate being digitally signed by a certifying authority, the asset holders including payer asset holders and payee asset holders wherein the payer asset holders use their corresponding signing keys to digitally sign the electronic assets when the electronic assets are transferred to the payee asset holders;

a fraud sampling unit to evaluate a sampled subset of the electronic assets received by the payee asset holders to detect if the electronic assets have been used in a fraudulent manner, and in an event of detection, the fraud sampling unit using the payer asset holders'"'"' signatures on the fraudulently used electronic assets to identify bad payer asset holders that are responsible for the fraudulent use from among said plurality of asset holders; and

the fraud sampling unit being configured to compile a list of the bad payer asset holders.

33. An electronic asset system as recited in claim 32, wherein during a transfer of a particular electronic asset from a particular payer asset holder to a particular payee asset holder, the payer asset holder generates a new version of the electronic asset, T_new, for transfer to the payee asset holder, the new version T_new being a concatenation of a previous version of the electronic asset, T_old, originally received by the payer asset holder and a digitally signed representation of the previous version T_old using the cryptographic signing key of the payer asset holder.

34. An electronic asset system as recited in claim 33, wherein the new version of the electronic asset is as follows:

space="preserve" listing-type="equation">T.sub.new =T.sub.old, S.sub.Kpayer Hash(Payer ID, T.sub.old, time, Payee ID)!

wherein "S_Kpayer " is a signing function using the cryptographic signing key of the payer asset holder and "Hash" is a hashing function used to compute a hash digest of data including an identification of the payer asset holder ("Payer ID"), the previous version of the electronic asset T_old, a time of the transfer ("time"), and an identification of the payee asset holder ("Payee ID").

35. An electronic asset system as recited in claim 32, wherein the payee the payee asset holders are equipped with a transmitter to transmit a received electronic asset for inclusion by the fraud sampling unit in the sampled subset.

36. An electronic asset system as recited in claim 32, wherein:

the fraud sampling unit transmits the list of the bad payer asset holders over a network; and

the payee asset holders are equipped with a receiver to receive the transmitted list.

37. An electronic asset system as recited in claim 32, wherein the fraud sampling unit broadcasts the list of the bad assets holders over a data communications network selected from a group comprising a wire-based public network, a cable-based entertainment network, and a wireless communications network.

38. An electronic asset system as recited in claim 32, wherein the payee asset holders store the list locally to prevent further use of the electronic assets stored on the bad payer asset holders.

39. An electronic asset system as recited in claim 32, wherein the fraud sampling unit evaluates the sampled subset to determine whether a single transferred electronic asset has been transferred from a single payer wallet to multiple payee electronic wallets, the multiple transfers being indicative of fraudulent use on part of the single payer electronic wallet.

40. An electronic asset system as recited in claim 32, wherein:

each certificate is issued on an issue date for a selected time period, the certificate being configured to expire on an expiration date following the selected time period after the issue date; and

the asset holders are updated with new certificates prior to the expiration date of the certificates, each new certificate containing a new cryptographic signing key and being digitally signed by the certifying authority.

41. An electronic asset system as recited in claim 32, wherein the asset issuing unit is the certifying authority that digitally signs the certificates for the asset holders.

42. An electronic asset system as recited in claim 32, wherein the certificates are blindly signed by the asset issuing unit without identity of the asset holders.

43. An electronic asset system as recited in claim 32, wherein the certificates issued to the payee asset holders include a bad credit count of the number of fraudulently used electronic assets received by the payee asset holders.

44. An electronic asset system as recited in claim 43, wherein the certificates expire and the payee asset holders update their certificates, the updated certificates continuing the bad credit count of the expired certificates.

45. An electronic asset system as recited in claim 44, wherein the asset issuing unit blindly signs the updated certificates and employs zero knowledge proof to ensure that the bad credit count is continued.

46. A method for detecting fraudulent transactions involving electronic assets, the method comprising the following steps:

issuing transferable electronic assets;

storing the electronic assets in electronic wallets;

spending at least some of the electronic assets contained on the electronic wallets by transferring the electronic assets from payer electronic wallets to payee electronic wallets;

extracting a sample of the spent electronic assets;

detecting from the sample of spent electronic assets whether there is one or more bad electronic assets that have been spent in a fraudulent manner; and

upon detecting a bad electronic asset, identifying an electronic wallet from which the bad electronic asset was spent.

47. A method as recited in claim 46, wherein the issuing step comprises the step of blindly issuing the transferable electronic assets without knowledge of identities of the electronic wallets.

48. A method as recited in claim 46 further comprising the following steps:

digitally signing the electronic assets with an initial signature during said issuing step; and

digitally signing the electronic assets with signatures of the payer electronic wallets that transfer the electronic assets to produce a registry of signatures for each electronic asset which evidences the payer electronic wallets that have transferred the electronic assets.

49. A method as recited in claim 46, wherein the issuing step comprises the step of issuing a digitally signed stick of multiple electronic assets in which the electronic wallets can transfer individual ones to distinct payees of the electronic assets from the stick without transferring the stick as a whole.

50. A method as recited in claim 46, wherein the spending step comprises the additional step of generating at the payer electronic wallet a new version of an electronic asset, T_new, for transfer to the payee electronic wallet, the new version T_new being a concatenation of a previous version of the electronic asset, T_old, originally received by the payer electronic wallet and a signed representation of the previous version T_old.

51. A method as recited in claim 50, wherein the generating step comprises generating the new version of the electronic asset as follows:

space="preserve" listing-type="equation">T.sub.new =T.sub.old, S.sub.Kpayer Hash(Payer ID, T.sub.old, time, Payee ID)!

wherein "S_Kpayer " is a signing function using a cryptographic key of the payer electronic wallet and "Hash" is a hashing function used to compute a hash digest of data including an identification of the payer electronic wallet ("Payer ID"), the previous version of the electronic asset T_old, a time of the transfer ("time"), and an identification of the payee electronic wallet ("Payee ID").

52. A method as recited in claim 46, further comprising the step of transmitting transferred electronic assets from the payee electronic wallets to a fraud sampling unit for possible inclusion in the sampled subset.

53. A method as recited in claim 46, wherein the detecting step comprises the additional step of evaluating the sampled subset to determine whether a single electronic asset has been transferred from a single payer wallet to multiple payee electronic wallets, the multiple transfers being indicative of fraudulent use on part of the single payer electronic wallet.

54. A method as recited in claim 46, further comprising the following steps:

assigning certificates to corresponding ones of the electronic wallets, the certificates having an expiration date whereupon expiration, the electronic wallets are prohibited from spending the electronic assets stored thereon; and

updating the certificates before the expiration date.

55. A method as recited in claim 54, further comprising the additional step of ceasing to issue electronic assets or certificates during a time period in which the certificates are updated.

56. A method as recited in claim 46, further comprising the following steps:

assigning certificates to the electronic wallets; and

accumulating within the certificates of the payee electronic wallets bad credit counts of the number of fraudulently used electronic assets accumulated by the payee electronic wallets.

57. A method as recited in claim 56, further comprising the step of continuing the bad credit count in new certificates issued at the expiration of old certificates.

58. A method as recited in claim 46, further comprising the following steps:

assigning certificates to the electronic wallets;

accumulating within the certificate of each payee electronic wallet a bad credit count of a number of fraudulently used electronic assets accumulated by the payee electronic wallet;

detecting when the bad credit count exceeds a bad credit limit; and

revoking the payee electronic wallet when the bad credit limit is exceeded.

59. A computer-implemented method for detecting fraudulent transactions involving transferable electronic assets used by electronic wallets, the electronic assets being transferred from payer electronic wallets to payee electronic wallets, the computer-implemented method comprising the following steps:

extracting a sample of the transferred electronic assets;

marking a transferred electronic asset as a bad electronic asset when the transferred electronic asset is transferred from a single payer electronic wallet to multiple payee electronic wallets;

identifying a payee electronic wallet from which the bad electronic asset was transferred as a bad electronic wallet; and

compiling a list of bad electronic wallets.

60. A computer-implemented method as recited in claim 59, wherein the electronic wallets have associated certificates, the method further comprising broadcasting a list of certificates for the bad electronic wallets.

61. A computer-readable medium having computer-executable instructions which direct a computer to perform the steps of the method as recited in claim 59.

62. A computer programmed to perform the steps of the method as recited in claim 59.

63. A computer-readable data structure for holding the list of bad electronic wallets that is generated by the steps of the method as recited in claim 59.

64. A method for transferring an electronic asset T_i from a payer to a payee, comprising the step of generating, at the payer, a next version of the electronic asset T_i+1 for transfer to the payee which is a concatenation of the electronic asset T_i received by the payer and a signed representation of the previous version T_i.

65. A method as recited in claim 64, wherein the generating step comprises generating the next version of the electronic asset as follows:

space="preserve" listing-type="equation">T.sub.i+1 =T.sub.i, S.sub.Kpayer Hash(Payer ID, T.sub.i, time, Payee ID)!

wherein "S_Kpayer " is a signing function using a cryptographic key of the payer electronic wallet and "Hash" is a hashing function used to compute a hash digest of data including an identification of the payer electronic wallet ("Payer ID"), the electronic asset T_i, a time of the transfer ("time"), and an identification of the payee electronic wallet ("Payee ID").

66. A computer programmed to perform the steps of the method as recited in claim 64.

67. A computer-readable medium having computer-executable instructions which direct a computer to perform the steps of the method as recited in claim 64.