Fraud prevention system and method

• US 6,516,056 B1
• Filed: 01/07/2000
• Issued: 02/04/2003
• Est. Priority Date: 01/07/2000
• Status: Expired due to Term

• Current Assignee: Vesta Corporation
• Original Assignee: Vesta Corporation
• Inventors: Justice, Scott C., Obrist, Ken C., Hopper, Eric L.
• Primary Examiner(s): Nguyen, Duc
• Assistant Examiner(s): TRAN, QUOC DUC
• Application Number:
  US09/479,768
• Time in Patent Office: 1,124 Days
• Field of Search: 379/112.01, 379/112.04, 379/114.01, 379/114.05, 379/114.14, 379/114.15, 379/114.16, 379/114.17, 379/114.19, 379/114.2, 379/127.02, 379/133, 379/143, 379/144.01, 379/144.03, 379/145, 379/188, 379/189
• US Class Current: 379/145
• CPC Class Codes: G06Q 20/4016 involving fraud or risk level assessment in transaction processing
• CPC Class Codes: G06Q 20/4037 Remote solvency checks
• CPC Class Codes: G06Q 40/08 Insurance
• CPC Class Codes: G07F 7/08 by coded identity card or credit card or other personal identification means without personal verification means G07F7/02
• CPC Class Codes: G07G 3/003 Anti-theft control theft alarms G08B13/00
• CPC Class Codes: H04M 15/00 Arrangements for metering, time-control or time indication ; Metering, charging or billing arrangements for voice wireline or wireless communications, e.g. VoIP
• CPC Class Codes: H04M 15/47 Fraud detection or prevention means
• CPC Class Codes: H04M 2215/0148 Fraud detection or prevention means
• CPC Class Codes: H04M 3/2281 Call monitoring, e.g. for law enforcement purposes; Call tracing; Detection or prevention of malicious calls

Abstract

A system and method for preventing fraud. The method typically includes identifying one or more fraud indicators and examining past transactions and/or a pending transaction associated with the account for the presence of the fraud indicators. The method also includes, by said examining, detecting at least one of the fraud indicators. The method also includes calculating a cumulative fraud risk level associated with the pending transaction based on the detected fraud indicators. The method may also include determining whether the cumulative fraud risk level meets or exceeds a predetermined threshold, and if the cumulative fraud risk level meets or exceeds the predetermined threshold, verifying the request for the transaction with an owner of the account. The method may further include assigning a weighted value to each of the fraud indicators. The account is typically a telephone calling account, such as a calling card account.

Claims

1. A method for use in inhibiting fraud in a pending account activation or recharge transaction associated with a telephone calling account, the method comprising:

identifying one or more fraud indicators;

receiving a request for a telephone calling account activation or recharge transaction;

before fulfilling the request, examining past transactions and/or the pending transaction associated with the account for the presence of the fraud indicators;

by said examining, detecting at least one of the fraud indicators; and

calculating a cumulative fraud risk level associated with the pending transaction based on the detected fraud indicators.

2. The method of claim 1, further comprising determining whether the cumulative fraud risk level meets or exceeds a predetermined threshold.

3. The method of claim 2, further comprising, if the cumulative fraud risk level meets or exceeds the predetermined threshold, verifying the request for the transaction with an owner of the account.

4. The method of claim 1, further comprising assigning a weighted value to each of the fraud indicators.

5. The method of claim 4, where calculating the cumulative fraud risk value includes adding the weighted values of each of the detected fraud indicators.

6. The method of claim 1, where at least one of the fraud indicators is a judgment of a customer service representative.

7. The method of claim 1, where at least one of the fraud indicators is a payment authorization failure.

8. The method of claim 7, where the payment authorization failure is a credit floor authorization failure.

9. The method of claim 7, where the payment authorization failure is a lost card authorization failure.

10. The method of claim 7, where the payment authorization failure is a stolen card authorization failure.

11. The method of claim 1, where at least one of the fraud indicators is an address verification failure.

12. The method of claim 1, where at least one of the fraud indicators is an excessive order history associated with the account.

13. The method of claim 12, where the excessive order history includes orders that exceed a predetermined monthly threshold.

14. The method of claim 13, where the predetermined monthly threshold is $150.

15. The method of claim 13, where the predetermined monthly threshold is $200.

16. The method of claim 12, where the excessive order history includes orders that exceed a predetermined weekly threshold.

17. The method of claim 16, where the predetermined weekly threshold is $100.

18. The method of claim 12, where the excessive order history includes more than one order on the same day.

19. The method of claim 12, where the excessive order history includes at least one order on each of at least two consecutive days.

20. The method of claim 1, where at least one of the fraud indicators is disputed charge associated with the account.

21. The method of claim 1, where at least one of the fraud indicators is a blacklisted payment account designator.

22. The method of claim 1, where at least one of the fraud indicators is a billing address in a predetermined area of high fraud risk.

23. The method of claim 1, where at least one of the fraud indicators is a customer calling from a telephone in an area of high fraud risk.

24. The method of claim 1, where at least one of the fraud indicators is a past occurrence of fraud associated with the customer account.

25. The method of claim 1, where at least one of the fraud indicators is a lack of a customer telephone number associated with the customer account.

26. The method of claim 1, where at least one of the fraud indicators is a forced strikeout associated with the customer account.

27. The method of claim 1, where at least one of the fraud indicators is receiving a request for the pending transaction from a public telephone.

28. The method of claim 1, where at least one of the fraud indicators is an area code of a caller who requested the pending transaction not matching a billing address associated with the account.

29. The method of claim 1, further comprising selectively turning off and on at least one of the fraud indicators.

30. A method for inhibiting fraud associated with activation or recharge of a customer telephone calling account, the method comprising:

identifying a fraud indicator;

periodically scanning past transactions related to the customer telephone calling account for the fraud indicator;

detecting the fraud indicator in a detected past transaction related to the account; and

increasing a risk level for future activation or recharge transactions having a parameter in common with the detected past transaction.

31. The method of claim 30, where the fraud indicator is one customer using a plurality of payment accounts.

32. The method of claim 30, where the fraud indicator is one payment account being used on a plurality of customer accounts.

33. The method of claim 30, where the fraud indicator is one payment account being used above a predetermined payment account use threshold.

34. The method of claim 33, where the predetermined payment account use threshold is a dollar amount.

35. The method of claim 33, where the predetermined payment account use threshold is a frequency.

36. The method of claim 30, where periodically scanning includes scanning more than about once per week.

37. The method of claim 30, where periodically scanning includes scanning about three times per week.

38. The method of claim 30, where periodically scanning includes scanning about once per day.

39. The method of claim 30, where increasing the risk level includes increasing the risk level to above a predetermined threshold to cause the future transactions to be reviewed for fraud.

40. The method of claim 30, where the future transactions having a parameter in common with the detected past transactions are future transactions associated with the same customer account as the past transactions.

41. The method of claim 30, where the future transactions having a parameter in common with the detected past transactions are future transactions associated with the same payment account designator as the past transactions.

42. The method of claim 30, where the future transactions having a parameter in common with the detected past transactions are future transactions associated with the same customer name as the past transactions.

43. A method for detecting fraud in an account activation or recharge transaction associated with a customer account, the customer account having an owner, the method comprising:

identifying one or more fraud indicators;

receiving a request for an account activation or recharge transaction from a customer;

receiving a payment account designator having an associated payment account, the account designator being configured to facilitate payment of funds from the payment account;

detecting whether any of the fraud indicators are present in the pending account activation or recharge transaction and/or in past transactions associated with the customer account;

calculating a cumulative fraud risk level associated with the account activation or recharge transaction based on the detected fraud indicators;

determining whether the cumulative fraud risk level meets or exceeds a first, predetermined threshold; and

if the cumulative fraud risk level meets or exceeds the first, predetermined threshold, then verifying the request for the account activation or recharge transaction.

44. The method of claim 43, further comprising determining whether the cumulative fraud risk level meets or exceeds a second, intermediate threshold.

45. The method of claim 44, further comprising, if the cumulative fraud risk level meets or exceeds the second, intermediate threshold, inserting comments regarding the order into the customer database commenting on the order.

46. The method of claim 43, where verifying includes calling a phone number of the customer and confirming the transaction with the customer.

47. The method of claim 46, where the phone number of the customer matches records of an issuer of the payment account.

48. A system for inhibiting fraud in a customer order associated with a customer account, the system comprising:

a computing device;

a database linked to the computing device, the database being configured to store information on past transactions associated with the customer account;

an order processing program executable on the computing device, the order processing program being configured to receive a customer telephone calling account activation or recharge order and assess a risk level for the order based on the past transactions related to the customer account stored in the database;

a fraud queue configured to receive the customer order if the risk level of the customer order exceeds a predetermined fraud risk threshold and hold the customer order pending verification of the order.