Location based fraud reduction system and method

RELATED APPLICATION

[0001] This application is a non-provisional application, claiming priority to:

[0002] (a) U.S. Provisional Application, No. 60/355,667, filed on Feb. 5, 2002, having the same title;

[0003] (b) U.S. Provisional Application, No. 60/356,861, filed on Feb. 12, 2002, having the same title; and

[0004] (c) U.S. Provisional Application, No. 60/361,646, filed on Mar. 4, 2002, having the same title.

[0005] To the extent where the disclosures are complementary and supportive of the present specification, specifications of the enumerated provisional applications are hereby fully incorporated by reference.

FIELD OF THE INVENTION

[0006] The present invention relates generally to fraud reduction, and in particular, to a request processing system and method for request to enter a financial transaction, access of physical/informational resources, and access of secured area.

BACKGROUND OF THE INVENTION

[0007] Credit account fraud costs companies millions of dollars per year. Additionally, companies spend large amounts of time and money trying to reduce credit account fraud. Many transactions involving credit accounts and credit cards occur via the Internet every day. Establishing the identity of the person using a credit card or credit account via the Internet is nearly impossible.

[0008] Currently, in the credit card industry there are several ways to help merchants verify that credit card information is actually coming from the cardholder and not a person trying to commit fraud. Unfortunately, none has proven to be effective all of the time.

[0009] One method is ZIP code verification. This process occurs when either a website prompts a cardholder to enter their billing ZIP code when completing a purchase form or when an operator verbally requests this information during a telephone transaction. When an order is placed, a match or no match is given based on whether or not the accurate ZIP code information was given.

[0010] Another fraud prevention method is additional number verification. Credit card issuers are now including extra digits on cards that are only visible to someone physically holding a card. These numbers usually appear on the front or back of a card. The idea behind this security measure is that only the person holding the card would have access to these numbers. For example, if a thief stole a credit card receipt it could contain the account number and the expiration date, but would not have these extra digits.

[0011] The problem with these verification methods is they are not fool proof in preventing fraud in the case where someone has physically stolen the card, piece of mail, or a company's internal database.

[0012] Similar problems exist for controlling access to usage of physical/informational resources, and access of secured areas.

BRIEF DESCRIPTION OF THE DRAWINGS

[0013] The present invention will be described by way of exemplary embodiments, but not limitations, illustrated in the accompanying drawings in which like references denote similar elements, and in which:

[0014]FIG. 1 is a schematic view illustrating a payment device present transaction according to one embodiment of the present invention.

[0015]FIG. 2 is a schematic view, according to another embodiment of the present invention, showing a payment device-not-present transaction.

[0016]FIG. 3 is a schematic view illustrating an access device-present transaction according to one embodiment of the present invention; and

[0017]FIG. 4 is a schematic view illustrating a security device-present transaction according to one embodiment of the present invention.

DETAILED DESCRIPTION OF EMBODIMENTS OF THE INVENTION

[0018] The present invention includes transaction and access control devices and systems equipped to reduce the likelihood of fraud.

[0019] Parts of the description will be presented in terms, such as payment device, payment device reader, payment processing system, location, transaction, access request, and so forth, consistent with the manner commonly employed by those skilled in the art to convey the substance of their work to others skilled in the art.

[0020] In the following description, various aspects of the present invention will be described. However, it will be apparent to those skilled in the art that the present invention may be practiced with only some or all aspects of the present invention. For purposes of explanation, specific numbers, materials and configurations are set forth in order to provide a thorough understanding of the present invention. However, it will be apparent to one skilled in the art that the present invention may be practiced without the specific details. In other instances, well-known features are omitted or simplified in order not to obscure the present invention.

[0021] Various operations will be described as multiple discrete steps in turn, in a manner that is most helpful in understanding the present invention, however, the order of description should not be construed as to imply that these operations are necessarily order dependent. In particular, these operations need not be performed in the order of presentation.

[0022] The phrase “in one embodiment” is used repeatedly. The phrase generally does not refer to the same embodiment, however, it may.

[0023] The terms “comprising”, “having” and “including” are synonymous, unless the context dictates otherwise.

[0024] As shown in FIG. 1, a payment device-present transaction system <b>10</b> is provided according to one embodiment of the present invention. Payment device-present transaction system <b>10</b> typically includes a payment device <b>11</b> configured to be read by a payment device reader <b>12</b>. An example of a payment device <b>11</b> is a credit or debit card, but may alternatively be a mobile commerce device (such as an mobile commerce enabled mobile telephone) configured to transmit payment information to credit device reader via an infrared or other communication link. In one embodiment, payment device <b>11</b> may include a position sensor <b>11</b><i>a, </i>as well as payer information <b>11</b><i>b. </i>

[0025] The term “mobile telephone” as used herein (in the specification and in the claims) refers to the class of telephone devices equipped to enable a user to make and receive calls wirelessly, notwithstanding the user's movement, as long as the user is within the communication reach of a service or base station of a wireless network service provider. Unless specifically excluded, the term “mobile telephone” is to include the analog subclass as well as the digital subclass (of all signaling protocols).

[0026] The payment device reader <b>12</b> typically includes a position sensor <b>12</b><i>a </i>and merchant related information, such as a merchant identifier, <b>12</b><i>b. </i>Typically, payment device reader <b>12</b> is configured to send payer and payment information, merchant information (such as merchant identifier), and/or position information to a payment processing system <b>14</b>, to request an amount to be charged against the account of payer for the transaction.

[0027] Alternatively, payment device <b>11</b> may be a mobile commerce device configured to directly transmit payer, payment, payee, and/or position information to payment processing system <b>14</b>, to request an amount to be charged against the account of payer for the transaction.

[0028] Further, in alternate embodiment, in lieu of an identifier of the location of the transaction, i.e. the location from where the request is submitted, information leading to the identifying of the location, e.g. name and branch of the merchant, may be sent instead. The payer information etc. may be sent as part of the request or after an initial request for the transaction.

[0029] Payment processing system <b>14</b> is configured to determine the location or position of the payment device and/or payment device reader by the position information received from payment sensor <b>11</b><i>a </i>or <b>12</b><i>a. </i>In one embodiment, payment processing system <b>14</b> is implemented with a conventional computing system having storage medium having stored therein programming instructions implementing the teachings of the present invention, and one or more processor to execute the programming instructions.

[0030] Alternatively, the payment processing system <b>14</b> is configured to detect the position of the payment device reader (and therefore, the position of the payment device in a payment device-present transaction), by resolving merchant information (such as the merchant identifier) using a database of known merchant locations. For example, a merchant having the merchant identifier 1234567 may correspond to a convenience mart on the corner of 5^thand Vine streets in a particular town.

[0031] For the illustrated embodiment, system <b>10</b> further includes a position-sensing device <b>16</b> having a position sensor <b>16</b><i>b. </i>Position-sensing device <b>16</b> may be a mobile telephone, watch, jewelry, computing device, global positioning unit, or other device including a position sensor <b>16</b><i>b. </i>Typically, except for its novel employment to prevent fraud under the present invention, position-sensing device <b>16</b> is otherwise not involved in payment related to the transaction entered into by payment device <b>11</b>.

[0032] The position-sensing device <b>16</b> is configured to send position information to a position tracking system <b>18</b>. The communication link between position tracking system <b>18</b> and position-sensing device <b>16</b> may be a satellite link such as used in a global positioning satellite system, radio frequency link, optical link such as infrared, or virtually any other communication link suitable for use in position detection.

[0033] Position tracking system <b>18</b> is configured to communicate the position information for the position-sensing device <b>16</b> to payment processing system <b>14</b>.

[0034] To detect a fraudulent use of payment device <b>11</b>, payment processing system <b>14</b> is configured to compare the position of position-sensing device <b>16</b> to the location or position of a current transaction involving payment device <b>11</b> (i.e., the location or position of payment device <b>11</b> and/or payment device reader <b>12</b>).

[0035] If the locations of the position-sensing device <b>16</b> and the payment device <b>11</b> are different, or alternatively, if the locations of the of the position-sensing device <b>16</b> and the payment device reader <b>12</b> are different, then the payment processing system is configured to determine that there is a possibility of fraud in the current transaction. Upon determining the possibility of fraud, the payment processing system is configured to take a designated action, such as preventing the completion of the transaction.

[0036] The requirement of the possession of the payment device and the position sensing device may be referred to as “double custody” fraud prevention or reduction.

[0037] The above embodiment is especially useful for face to face transactions. A cardholder may carry a device that has a built-in position locator within it. The device may be a cell phone, watch, jewelry, wallet, or any other item that a locator could be placed in and that a person would normally carry. The device may even change from day to day. For example, some people currently have three cell phones from various companies and each has a unique feature. One may be extremely compact, one may be large, but can send and receive emails, and the third may have a long battery life. Depending on the needs for a particular day, a person may choose to use one of the three phones and with companion a location device. There may be three phones, but maybe only one location device.

[0038] The location device may e.g. be watch. The location device may be integrated with or removably associated with the watch. The cardholder would inform the credit card company ahead of time, as to the identification number/model of the location device. Once this information is given, the information may be entered into the database, and the system is primed to prevent fraudulent use of a credit card.

[0039] The cardholder may turn the watch's tracking device on or off at their leisure, as you can with a cell phone. When the watch's tracking device is on, the database would contain the current location, such as, the coordinates, of the watch (during a transaction).

[0040] When the cardholder decides to make a purchase e.g. at the Portland airport (PDX), the cardholder may turn the tracking device on and the database would be provided with the location information of the watch and its owner.

[0041] The merchant's machine may send out information about the transaction to the processing company, including the merchant's location. In this case, the location is PDX. The processing system may access the database to verify the merchant's location against the watch's location and registers that the watch is also at PDX and gives a match to permit the transaction to be completed.

[0042] Similarly, the above embodiment may be applied to wireless portable Point-Of-Sale (POS) terminals. Individuals may be provided with their own personal portable terminals equipped to provide location information. The merchant's POS terminal may also be portable, and therefore may be relocated and use in a weekly or monthly specialty, fruit or produce market. In like manner, transactions conducted under this “transient” market environment may also be accorded the added fraud prevention as earlier described.

[0043]FIG. 2 shows a payment-device-not-present transaction system <b>20</b> according to another embodiment of the present invention. Payment-device-not-present transaction system <b>20</b> typically includes a device <b>21</b> that is capable of transmitting position information to a payment processing system <b>24</b>. Typically, device <b>21</b> is a mobile telephone or a computing device configured to detect its position as well as to enter into payment transactions using on-board payment information. Payment-device-not-present transaction system <b>20</b> typically is configured to enable a user to enter into transaction, such as making a purchase by mobile telephone, or by a computing device (PDA, laptop, desktop, web-enabled mobile telephone, etc.) over a computer network, or in another manner in which the user is not required to present a payment device, such as a credit card at the point of sale.

[0044] Device <b>21</b> may include an interface configured to be used to input transaction data for a transaction, such as a purchase, to be entered into by the user. This transaction data may include payer information, items to be purchased, payment information etc. Device <b>21</b> may also include a position sensor <b>22</b> configured to detect a position of the device and send this position information to payment processing system <b>24</b> via a wireless or a wireline communication link. Thus, device <b>21</b> is typically configured to send substantially simultaneously the transaction data and position information to payment processing system <b>24</b>. Payment processing system <b>24</b> includes an associated database of permissible and/or impermissible use areas for a particular user's device <b>21</b>.

[0045] Payment processing system <b>24</b> is configured to check position information of the device <b>21</b> against the permissible and/or impermissible use areas for each user, and thereby determine if the device is being used in an impermissible use area for the user. If so, the system <b>24</b> is configured to indicate that a possibility of fraud exists in the pending transaction. If the possibility of fraud is detected, the system may be configured to take an action, such as preventing fulfillment of the transaction due to the possibility of fraud.

[0046] The payment processing system may be implemented with conventional computing system with storage medium having programming instructions designed to implement the present invention, and one or more processors to execute the programming instructions.

[0047] The above embodiment is particularly useful in preventing fraud in e-commerce transactions over a public network, such as the Internet. Typically, when a cardholder orders a product or service via the Internet or telephone, there is no good way to know, in real-time, where that person and credit card are. A thief in Baltimore could be using an Oregonian's card information.

[0048] Under the present invention, when a cardholder is issued a card, the cardholder may be asked to give the geographic location of their home and office, as well as any other locations that the cardholder frequently place on-line orders and use the credit card. This information may be obtained during the application process or on an ongoing basis. The information may be entered into a database.

[0049] Thus, when an on-line order is placed through a device equipped to also sense and provide current location information to the order processing system, the order processing system may check the database for whether the transaction is being conducted from a permissible location. If the transaction is not being conducted from a permissible location, the transaction may be rejected. Additionally, a warning in the form of a message and/or a call may be provided to the cardholder.

[0050] The embodiment may also potentially assist in the capturing of a credit card thief attempting to perpetrate the fraudulent transaction. If the credit card thief is making the fraudulent transaction from a device equipped to provide location information as described above, the location information could pin point where the transaction was initiated, making apprehension easier.

[0051] As shown in FIG. 3, an access device-present transaction system <b>100</b> is provided according to one embodiment of the present invention. System <b>100</b> is typically configured to use location indicators, alone or in combination with other parameters, to determine whether or not a user may operate on a particular virtual private computer network. Access device-present transaction system <b>100</b> typically includes an access device <b>110</b> configured to access network <b>120</b>. The access device <b>110</b> may be a laptop, PDA, cell phone, or any other type of computing device configured to access a computer network, such as network <b>120</b>, which may be the Internet.

[0052] Device <b>110</b> typically includes position sensor <b>110</b><i>a, </i>and may be connected to network <b>120</b> via a communication link <b>130</b>. Communication link <b>130</b> may be a wireless, radio, optical, USB, or virtually any other link that allows device <b>110</b> to communicate with network <b>120</b>.

[0053] Upon establishment of link <b>130</b>, device <b>110</b> is further configured to communicate with and/or operate on a variety of sub-networks, websites, etc. on network <b>120</b>.

[0054] The network <b>120</b> typically includes a virtual private network (VPN) <b>120</b><i>a </i>and is configured to allow access device <b>110</b>, and similar devices to communicate with, and/or operate on VPN <b>120</b><i>a. </i>

[0055] Upon being accessed by device <b>110</b>, VPN <b>120</b><i>a </i>is configured to send access and/or position information of device <b>110</b> to a VPN access control system <b>140</b>. In alternate embodiments, the access and/or position information of device <b>110</b> may be provided to VPN access control system <b>140</b> directly.

[0056] System <b>140</b> is configured to use the access and/or position information received from VPN <b>120</b><i>a </i>and/or information directly from device <b>110</b>, along with position information received from position tracking system <b>180</b>, discussed below, to determine if device <b>110</b> may operate on network <b>120</b><i>a. </i>

[0057] System <b>100</b> further includes a position-sensing device <b>160</b> having a position sensor <b>160</b><i>b. </i>Position-sensing device <b>160</b> may be a mobile telephone, watch, jewelry, computing device, global positioning unit, or other device including a position sensor <b>160</b><i>b. </i>Typically, except to facilitate access device <b>110</b> in gaining access to VPN <b>120</b><i>a</i>, position-sensing device <b>160</b> is otherwise not involved in the access of VPN <b>120</b><i>a </i>by access device <b>110</b>.

[0058] The position-sensing device <b>160</b> is configured to send position information to a position tracking system <b>180</b>. The communication link between position tracking system <b>180</b> and position-sensing device <b>160</b> may be a satellite link such as used in a global positioning satellite system, radio frequency link, optical link such as infrared, or virtually any other communication link suitable for use in position detection. Position tracking system <b>180</b> is configured to communicate the position information for the position-sensing device <b>160</b> to VPN access control system <b>140</b>.

[0059] To allow a user of access device <b>110</b> to operate on VPN <b>120</b><i>a</i>, VPN access control system <b>140</b> is configured to compare the position of position-sensing device <b>160</b> to the location or position of access device <b>110</b>. If the locations of the position-sensing device <b>160</b> and the access device <b>110</b> are different, or alternatively, if the location of the access device <b>110</b> is outside of some predetermined acceptable location, then the VPN access system is configured to determine that there is a possibility of an improper use of device <b>110</b>, with respect to VPN <b>120</b><i>a. </i>

[0060] Upon determining the possibility of improper use, the VPN access control system is configured to take a designated action, such as preventing access device <b>110</b> from operating on VPN <b>120</b><i>a</i>. In instances where position information is obtained directly from access device <b>110</b>, control system <b>140</b> may be further configured to compare this information with that obtained from tracking system <b>180</b> and use it to either admit or deny access to access device <b>110</b> on VPN <b>120</b><i>a</i>, prior to the establishment of a communication link between the two.

[0061] The access control system may be implemented with conventional computing system with storage medium having programming instructions designed to implement the present invention, and one or more processors to execute the programming instructions.

[0062] As shown in FIG. 4, a security device-present transaction system <b>200</b> is provided according to one embodiment of the present invention. System <b>200</b> is typically configured to use location indicators, alone or in combination with other parameters, to determine the security clearance for access to a particular secured location. Security device-present transaction system <b>200</b> typically includes a security device <b>210</b> configured to be read by a security device reader <b>220</b>. Security device <b>210</b> may be a card or badge encoded with security information, such as an access code.

[0063] Alternatively, the security device may be a mobile device (such as a mobile telephone) configured to transmit security information to security device reader <b>220</b> via an infrared or other communication link. Further, the security device may be any other device capable of providing the appropriate security and position information to security device reader <b>220</b>. In particular, security device <b>210</b> may include a position sensor <b>210</b><i>a</i>, configured to transmit information about its relative geographical location.

[0064] The security device reader <b>220</b> is typically configured to read security device <b>210</b>, and to transmit security information received there from, to a security access control system <b>240</b>. Typically, security access control system <b>240</b> knows the location of security device reader <b>220</b>. Alternatively, security reader <b>220</b> may include a position sensor <b>220</b><i>a </i>and may be configured to send position information, along with security information, to security access system <b>240</b>. Alternatively, security device <b>210</b> may be a mobile device configured to directly transmit security and/or position information to security access control system <b>240</b> via a wireless link.

[0065] Security access control system <b>240</b> is further configured to detect the location or position of security device <b>210</b> and/or security reader <b>220</b> by the position information received from position sensors <b>210</b><i>a</i>, and/or <b>220</b><i>a</i>. Alternatively, the security access control system <b>240</b> is configured to detect the position of the security device reader (and therefore the position of the security device in a device-present transaction), by resolving a security identifier <b>220</b><i>b </i>using a database of known security identifier locations. For example, the security identifier 1234567 may correspond to a gated entrance to a secured building.

[0066] System <b>200</b> further includes a position-sensing device <b>260</b> having a position sensor <b>260</b><i>b. </i>Position-sensing device <b>260</b> may be a mobile telephone, watch, jewelry, computing device, global positioning unit, or other device including a position sensor <b>260</b><i>b. </i>Typically, except for facilitating validation of the usage security device <b>210</b>, position-sensing device <b>260</b> is otherwise not involved in the transaction entered into between security device <b>210</b> and security access control system <b>240</b> (via security reader <b>220</b>), or similar transactions.

[0067] The position-sensing device <b>260</b> is configured to send position information to a position tracking system <b>280</b>. The communication link between position tracking system <b>280</b> and position-sensing device <b>260</b> may be a satellite link such as used in a global positioning satellite system, radio frequency link, optical link such as infrared, or virtually any other communication link suitable for use in position detection. Position tracking system <b>280</b> is configured to communicate the position information for the position-sensing device <b>260</b> to payment processing system <b>240</b>.

[0068] In order to detect an improper use of security device <b>210</b>, security access control system <b>240</b> is configured to compare the position of position-sensing device <b>260</b> to the location or position of a current transaction involving security device <b>210</b> (i.e., the location or position of security device <b>210</b> and/or security device reader <b>220</b>). If the locations of the position-sensing device <b>260</b> and the security device <b>210</b> are different, or alternatively, if the locations of position-sensing device <b>260</b> and security reader <b>220</b> are different, then the security access control system is configured to determine that there is a possibility of improper use of the security device in the current transaction.

[0069] Upon determining the possibility of improper use, the system <b>240</b> is configured to take a designated action, such as warning a security attendant and/or by automatically locking an entrance to a secured area.

[0070] The security control system may be implemented with conventional computing system with storage medium having programming instructions designed to implement the present invention, and one or more processors to execute the programming instructions.

[0071] Conclusion and Epilogue

[0072] Thus, it can be seen from the above descriptions, various novel location based method and apparatus for fraud prevention or reduction, including “double custody” methods, have been described.

[0073] While the present invention has been described in terms of the foregoing embodiments, those skilled in the art will recognize that the invention is not limited to the embodiments described. The present invention can be practiced with modification and alteration within the spirit and scope of the appended claims.

[0074] In particular, the present invention may be practiced to control access to physical resources or spaces without the employment of separate location sensor device, similar to the embodiment of FIG. 2 as an alternative to the embodiment of FIG. 1.

[0075] Further, the present invention may be employed selectively for only certain high value transactions, usages or accesses. Rules may be pre-established to facilitate identification of the higher value transactions, usages or accesses, and trigger the application of the present invention.

[0076] Yet further, the present invention may be used to accumulate the locations where the transactions are occurred, and a user may access the accumulated information to create a geographic picture or diary of the transactions conducted over a selected period.

[0077] Thus, the description is to be regarded as illustrative instead of restrictive on the present invention.