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 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 method and system for evaluating fraud risk in an electronic commerce transaction between consumer and a merchant over a network is disclosed. The merchant requests service from the system over the network 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 to the merchant. In one embodiment, data validation, highly predictive artificial intelligence pattern matching, network data aggregation and negative file checks are used to examine numerous factors to calculate fraud risk. The fraud screening system performs analysis that utilizes data elements submitted with the order, and includes data integrity checks and correlation analyses based on the characteristics of the transaction. Other analysis includes a comparative comparison of the current transaction against past known fraudulent transactions, and a search of a transaction history database to identify abnormal velocity patterns, name and address changes, and known defrauders. A risk score is generated and compared to the merchant'"'"'s specified risk threshold. The result is returned to the merchant for order disposition. In one alternative, scoring algorithms are regularly refined through the use of a closed-loop risk modeling process that enables the service provided by the system to be fine-tuned to adapt to new or changing fraud patterns.
478 Citations
38 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 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, 21, 22)
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23. 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 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 (25, 26, 27, 28, 29, 30, 31)
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24. 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 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. - View Dependent Claims (32, 33, 34, 35, 36, 37, 38)
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Specification