Reducing risks related to check verification

• US 8,775,301 B2
• Filed: 08/21/2013
• Issued: 07/08/2014
• Est. Priority Date: 10/29/2004
• Status: Active Grant

• Current Assignee: American Express Travel Related Services Company, Inc. (American Express Company)
• Original Assignee: American Express Travel Related Services Company, Inc. (American Express Company)
• Inventors: Haggerty, Kathleen, Okoh, Benedict O., Yuan, Chao M.
• Primary Examiner(s): Holly, John H
• Application Number:
  US13/972,650
• Publication Number:
  US 20140006255A1
• Time in Patent Office: 321 Days
• Field of Search: 705/1.1, 705/38, 705/35, 705/40, 705/36.R, 705/26.1, 705/7.29, 705/14.52, 235/379, 235/380, 380/232, 455/410
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

Share of Wallet (“SOW”) is a modeling approach that utilizes various data sources to provide scores that describe a consumers spending capability, tradeline history including balance transfers, and balance information. Share of wallet scores can be used as a parameter for determining whether or not to accept and/or guarantee a check. The share of wallet can be used to calculate a risk value of a customer. For example, the scores can weight one or more factors related to the check writer and differentiate between a low-risk customer and a high-risk customer.

Claims

1. A computer-based method comprising:

modeling, by a computer-based system for reducing merchant risks, consumer spending patterns to produce a model of consumer spending patterns, wherein the computer-based system comprises a processor and a tangible, non-transitory memory, and wherein the model is stored in the memory of the computer-based system;

estimating, by the computer-based system, a credit-related characteristic of the customer based on the model of consumer spending patterns;

offsetting, by the computer-based system, previous balance transfers from the estimated credit-related characteristic;

determining, by the computer-based system, a risk value of the customer based on the estimated credit-related characteristic; and

assessing a collection probability of a dishonored cheek based on the determined risk value.

2. The method of claim 1, wherein the modeling uses individual consumer data and aggregate consumer data.

3. The method of claim 1, wherein the modeling uses individual consumer data and aggregate consumer data, including tradeline data, internal customer data, and consumer panel data.

4. The method of claim 1, wherein the estimating is further based on tradeline data of the customer and identified balance transfers of the customer.

5. The method of claim 1, wherein the determining comprises determining whether the customer is a high-risk customer or a low-risk customer.

6. The method of claim 1, further comprising:

accepting the check in response to the customer being a low-risk customer; and

declining the check in response to the customer being a high-risk customer.

7. The method of claim 1, wherein the determining comprises:

weighting at least one factor relating to the customer'"'"'s check based on the estimated credit characteristic; and

calculating a risk value based on the weighted factor.

8. The method of claim 7, wherein factors relating to the customer'"'"'s check include at least one of velocity, prior activity, the customers presence in check databases, size of the check, prior bad check activity by geographic location, and prior had check activity by merchant location.

9. The method of claim 1, wherein the credit-related characteristic is at least one of a size of the customer'"'"'s spending wallet, a size of the customer'"'"'s revolving spending, a size of the customer'"'"'s transacting spending, a share of wallet size for a particular spend category, a spend capacity of the customer, or an amount of balance transfers transacted by the customer.

10. The method of claim 1, further comprising making a check acceptance decision based on the determined risk value.

11. An article of manufacture including a non-transitory, tangible computer readable storage medium having instructions stored thereon that, in response to execution by a computer-based system for reducing merchant risks, cause the computer-based system to perform operations comprising:

modeling, by the computer-based system, consumer spending patterns to produce a model of consumer spending patterns, wherein the computer-based system comprises a processor and a tangible, non-transitory memory, and wherein the model is stored in the memory of the computer-based system;

estimating, by the computer-based system, a credit-related characteristic of the customer based on the model of consumer spending patterns;

offsetting, by the computer-based system, previous balance transfers from the estimated credit-related characteristic;

determining, by the computer-based system, a risk value of the customer based on the estimated credit-related characteristic; and

assessing a collection probability of a dishonored check based on the determined risk value.

12. The article of claim 11, wherein the modeling uses individual consumer data and aggregate consumer data.

13. The article of claim 11, wherein the modeling uses individual consumer data and aggregate consumer data, including tradeline data, internal customer data, and consumer panel data.

14. The article of claim 11, wherein the estimating is further based on tradeline data of the customer and identified balance transfers of the customer.

15. The article of claim 11, wherein the determining comprises determining whether the customer is a high-risk customer or a low-risk customer.

16. The article of claim 11, further comprising:

accepting the check in response to the customer being a low-risk customer; and

declining the check in response to the customer being a high-risk customer.

17. The article of claim 11, wherein the determining comprises:

weighting at least one factor relating to the customer'"'"'s check based on the estimated credit characteristic; and

calculating a risk value based on the weighted factor.

18. The article of claim 17, wherein factors relating to the customer'"'"'s check include at least one of velocity, prior activity, the customer'"'"'s presence in check databases, size of the check, prior had check activity by geographic location, and prior bad check activity by merchant location.

19. The article of claim 11, wherein the credit-related characteristic is at least one of a size of the customer'"'"'s spending wallet, a size of the customer'"'"'s revolving spending, a size of the customer'"'"'s transacting spending, a share of wallet size for a particular spend category, a spend capacity of the customer, or an amount of balance transfers transacted by the customer.

20. A system comprising:

a processor for reducing merchant risks;

a tangible, non-transitory memory configured to communicate with the processor;

a modeling module in communication with the processor and configured to model consumer spending patterns to produce a model of consumer spending patterns;

an estimating module in communication with the processor and configured to estimate a credit-related characteristic of the customer based on the model of consumer spending patterns;

an offsetting module in communication with the processor and configured to offset previous balance transfers from the estimated credit-related characteristic;

a determining module in communication with the processor and configured to determine a risk value of the customer based on the estimated credit-related characteristic; and

an assessing module in communication with the processor and configured to assess a collection probability of a dishonored cheek based on the determined risk value.