Method and system for automating fraud authorization strategies

• US 7,707,089 B1
• Filed: 03/12/2008
• Issued: 04/27/2010
• Est. Priority Date: 03/12/2008
• Status: Active Grant

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: Barton, Thomas C., Paulson, Harold Jr.
• Primary Examiner(s): Dass; Harish T.
• Application Number:
  US12/046,630
• Time in Patent Office: 776 Days
• Field of Search: 705/18, 705/38, 705/44, 705/35, 705/39, 235/380, 379/114.4, 706/47
• US Class Current: 705/35
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• CPC Class Codes: G06Q 20/105 involving programming of a portable memory device, e.g. IC cards, "electronic purses"
• CPC Class Codes: G06Q 20/40 Authorisation, e.g. identification of payer or payee, verification of customer or shop credentials; Review and approval of payers, e.g. check credit lines or negative lists
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

According to an embodiment of the present invention, a computer implemented method and system for automatically implementing a fraud strategy may involve identifying transaction data related to a customer transaction based on a payment instrument; automatically identifying a pattern based on one or more factors associated with a customer spending profile; identifying a potential fraud situation based on the identified pattern and the transaction data; executing an action for the potential fraud situation; and adjusting authorized use of the payment instrument.

Claims

1. A computer implemented method for automatically implementing a fraud strategy, the method comprising the steps of:

using a computer processor;

receiving transaction data related to a customer transaction based on a payment instrument;

retrieving a customer spending profile for the customer from at least one database;

automatically identifying a pattern based on one or more factors associated with the customer spending profile;

identifying a potential fraud situation based on the identified pattern and the transaction data;

executing an action for the potential fraud situation; and

adjusting authorized use of the payment instrument in response to the potential fraud situation.

2. The method of claim 1, wherein the one or more factors comprise one or more of merchant data, customer spending data, customer demographic data, profitability data and delinquency data.

3. The method of claim 1, wherein the step of identifying a potential fraud situation further comprises the step of:

determining the customer'"'"'s current location relative to the location of the customer transaction.

4. The method of claim 1, wherein the step of identifying a potential fraud situation further comprises the step of:

determining the customer'"'"'s transaction history compared to the customer transaction.

5. The method of claim 1, wherein the action comprises authorizing limited use of the payment instrument.

6. The method of claim 5, wherein the limited use is one or more of location limited, transaction type limited and merchant limited.

7. The method of claim 1, wherein the action further comprises determining a root cause of the potential fraud situation and flagging similarly situated consumers for a potential fraud situation.

8. The method of claim 1, wherein the step of identifying a potential fraud situation further comprises the step of:

applying one or more exclusions for fraud detection.

9. The method of claim 8, wherein the one or more exclusions comprise one or more of customer travel and emergency expenses.

10. The method of claim 1, further comprising the step of:

dynamically adjusting the one or more factors associated with the pattern.

11. The method of claim 1, wherein the payment instrument is at least one of a physical device and an account.

13. The method of claim 1, wherein the step of identifying a potential fraud situation further comprises the step of:

comparing the customer transaction to a transaction history for a similarly situated customer.

14. The method of claim 1, further comprising:

verifying the identified pattern with the customer.

12. A computer implemented system for automatically implementing a fraud strategy, comprising:

at least one computer processor;

at least one computer memory;

a pattern detection module for identifying transaction data related to a customer transaction based on a payment instrument;

automatically identifying a pattern based on one or more factors associated with a customer spending profile; and

identifying a potential fraud situation based on the identified pattern and the transaction data; and

an action module for executing an action for the potential fraud situation; and

adjusting authorized use of the payment instrument in response to the potential fraud situation.

15. The system of claim 12, wherein the payment instrument is at least one of a physical device and an account.

16. The system of claim 12, wherein the one or more factors comprise one or more of merchant data, customer spending data, customer demographic data, profitability data and delinquency data.

17. The system of claim 12, wherein the pattern detection module further determines the customer'"'"'s current location relative to the location of the customer transaction.

18. The system of claim 12, wherein the pattern detection module further determines the customer'"'"'s transaction history compared to the customer transaction.

19. The system of claim 12, wherein the action comprises authorizing limited use of the payment instrument.

20. The system of claim 19, wherein the limited use is one or more of location limited, transaction type limited and merchant limited.

21. The system of claim 12, wherein the action further comprises determining a root cause of the potential fraud situation and flagging similarly situated consumers for a potential fraud situation.

22. The system of claim 12, wherein the action module further applies one or more exclusions for fraud detection.

23. The system of claim 22, wherein the one or more exclusions comprise one or more of customer travel and emergency expenses.

24. The system of claim 12, wherein the pattern detection module further dynamically adjusts the one or more factors associated with the pattern.

25. A computer readable media comprising code to perform the steps of:

identifying transaction data related to a customer transaction based on a payment instrument;

automatically identifying a pattern based on one or more factors associated with a customer spending profile;

identifying a potential fraud situation based on the identified pattern and the transaction data;

executing an action for the potential fraud situation; and

adjusting authorized use of the payment instrument in response to the potential fraud situation.

26. A computer implemented method for automatically implementing a fraud strategy, the method comprising the steps of:

using a computer processor;

receiving transaction data related to a customer transaction based on a payment instrument;

retrieving a customer spending profile for the customer from at least one database;

automatically identifying a pattern based on one or more factors associated with the customer spending profile;

identifying a potential fraud situation based on the identified pattern and the transaction data;

determining the customer'"'"'s current location relative to the location of the customer transaction;

determining the customer'"'"'s transaction history compared to the customer transaction;

comparing the customer transaction to a transaction history for a similarly situated customer;

applying one or more exclusions for fraud detection;

wherein the one or more exclusions comprise one or more of customer travel and emergency expenses;

executing an action for the potential fraud situation;

adjusting authorized use of the payment instrument in response to the potential fraud situation and

dynamically adjusting the one or more factors associated with the pattern;

wherein the one or more factors comprise one or more of merchant data, customer spending data, customer demographic data, profitability data and delinquency data;

wherein the action comprises authorizing limited use of the payment instrument;

wherein the limited use is one or more of location limited, transaction type limited and merchant limited;

wherein the action further comprises determining a root cause of the potential fraud situation and flagging similarly situated consumers for a potential fraud situation.