Method and apparatus for evaluating fraud risk in an electronic commerce transaction
First Claim
1. A method of evaluating fraud risk of an electronic commerce transaction, the method comprising the computer-implemented steps of:
- receiving transaction data that defines the electronic commerce transaction;
determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction data, wherein each of the plurality of tests determines whether the transaction data appears to represent a genuine transaction based on specified criteria;
determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data;
combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and
blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transaction;
wherein receiving transaction data comprises the steps of receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein determining a second fraud risk score value comprises the steps of determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity;
wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and
wherein the step of blending the model score value comprises the steps of;
determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and
applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model.
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Abstract
A technique for evaluating fraud risk in e-commerce transactions between consumer and a merchant is disclosed. The merchant requests service from the system using a secure, open messaging protocol. An e-commerce transaction or electronic purchase order is received from the merchant, the level of risk associated with each order is measured, and a risk score is returned. In one embodiment, data validation, highly predictive artificial intelligence pattern matching, network data aggregation and negative file checks are used. The system performs analysis including data integrity checks and correlation analyses based on characteristics of the transaction. Other analysis includes comparison of the current transaction against known fraudulent transactions, and a search of a transaction history database to identify abnormal patterns, name and address changes, and defrauders. In one alternative, scoring algorithms are refined through use of a closed-loop risk modeling process enabling the service to adapt to new or changing fraud patterns.
544 Citations
24 Claims
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1. A method of evaluating fraud risk of an electronic commerce transaction, the method comprising the computer-implemented steps of:
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receiving transaction data that defines the electronic commerce transaction; determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction data, wherein each of the plurality of tests determines whether the transaction data appears to represent a genuine transaction based on specified criteria; determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data; combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transaction; wherein receiving transaction data comprises the steps of receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein determining a second fraud risk score value comprises the steps of determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity; wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and wherein the step of blending the model score value comprises the steps of; determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20)
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21. A computer-readable medium carrying one or more sequences of instructions for evaluating fraud risk of an electronic commerce transaction, which instructions, when executed by one or more processors, cause the one or more processors to carry out the steps of:
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receiving transaction information that defines the electronic commerce transaction; determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction data, wherein each of the plurality of tests determines whether the transaction data appears to represent a genuine transaction based on specified criteria; determining a second fraud risk score value associated with the electronic transaction based on a comparison of the transaction information to historical transaction information; combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transaction; wherein receiving transaction data comprises the steps of receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein determining a second fraud risk score value comprises the steps of determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity; wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and wherein the step of blending the model score value comprises the steps of; determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model.
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22. An apparatus for evaluating fraud risk of an electronic commerce transaction, the apparatus comprising:
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means for receiving transaction data that defines the electronic commerce transaction; means for determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction data, wherein each of the plurality of tests determines whether the transaction data appears to represent a genuine transaction based on specified criteria; means for determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data; means for combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and means for blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transaction; wherein the means for receiving transaction data comprises means for receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein the means for determining a second fraud risk score value comprises means for determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity; wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and wherein the means for blending the model score value comprises; means for determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and means for applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model.
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23. An apparatus for evaluating fraud risk of an electronic commerce transaction, comprising:
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a processor; a computer readable medium having one or more sequences of instructions stored thereon which, when executed by the processor, cause the processor to carry out the steps of; receiving transaction data that defines the electronic commerce transaction; determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction data, wherein each of the plurality of tests determines whether the transaction data appears to represent a genuine transaction based on specified criteria; determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data; combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transactions wherein receiving transaction data comprises the steps of receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein determining a second fraud risk score value comprises the steps of determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity; wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and wherein the step of blending the model score value comprises the steps of; determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model.
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24. A computer-readable medium carrying one or more sequences of instructions for evaluating fraud risk of an electronic commerce transaction, when executed by one or more processors, the computer readable medium comprising:
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memory carrying one or more instructions that cause the one or more processors to carry out the step of receiving transaction information that defines the electronic commerce transaction; memory carrying one or more instructions that cause the one or more processors to carry out the step of determining a first fraud risk score value associated with the electronic commerce transaction based on applying a plurality of tests to the transaction information, wherein each of the plurality of tests determines whether the transaction information appears to represent a genuine transaction based on specified criteria; memory carrying instructions one or more instructions that cause the one or more processors to carry out the step of determining a second fraud risk score value associated with the electronic transaction based on a comparison of the transaction information to historical transaction information; memory carrying one or more instructions that cause the one or more processors to carry out the step of combining the first fraud risk score value and the second fraud risk score value using a statistical model to result in creating a model score value; and memory carrying one or more instructions that cause the one or more processors to carry out the step of blending the model score value with one or more merchant-specific threshold values to result in creating and storing a final fraud risk score value for the electronic commerce transaction; wherein the instructions that cause receiving transaction data comprises instructions that cause receiving transaction data that defines the electronic commerce transaction for a particular Internet identity, and wherein the instructions that cause determining a second fraud risk score value comprise instructions that cause determining a second fraud risk score value associated with the electronic commerce transaction based on a comparison of the transaction data to historical transaction data for other electronic commerce transactions pertaining to the same Internet identity; wherein the particular Internet identity comprises a first hash value of an email address of a prospective purchaser carried in combination with a second hash value of a card bank identification number of the prospective purchaser; and wherein the instructions that cause blending the model score value comprise; instructions that cause determining in which fraud risk zone, of two or more fraud risk zones, the boundaries of which are determined by the one or more merchant-specific threshold values, the model score value belongs; and instructions that cause applying a policy corresponding to the determined fraud risk zone, wherein the policy dictates a magnitude and an allowable direction of influence applied by a heuristic model and a statistical model.
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Specification