Patent Issued for Identifying chargeback scenarios based upon non-compliant merchant computer terminals (USPTO 11037159)

2021 JUL 01 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- State Farm Mutual Automobile Insurance Company (Bloomington, Illinois, United States) has been issued patent number 11037159, according to news reporting originating out of Alexandria, Virginia, by NewsRx editors.

The patent’s inventors are Batra, Reena (Alpharetta, GA, US), Craig, Bradley A. (Normal, IL, US), Dua, Puneit (Bloomington, IL, US), Flowers, Elizabeth (Bloomington, IL, US), Kramme, Timothy (Parker, TX, US), Phillips, Shanna L. (Bloomington, IL, US), Ruestman, Russell (Minonk, IL, US), Valero, Miriam (Bloomington, IL, US).

This patent was filed on March 22, 2017 and was published online on June 15, 2021.

From the background information supplied by the inventors, news correspondents obtained the following quote: “Financial fraud, in its many forms, is a problem of enormous magnitude and scope, causing billions of dollars in economic losses and impacting many millions of people. Types of financial fraud include use of a lost or stolen card, account takeover, skimming, chargeback (“friendly”) fraud, counterfeiting, forgeries and application (e.g., loan application) fraud, to name just a few. The problem only continues to grow as various technological advances, intended to improve convenience and efficiency in the marketplace, provide new opportunities for bad actors. For example, an ever-increasing amount of fraud may be linked to online transactions made via the Internet.

“Various software applications have been developed to detect potentially fraudulent transactions. For example, dollar amounts and geographic locations have generally been used to flag particular credit or debit card transactions, with cardholders then being contacted by employees of the card issuer to determine whether the transactions were indeed fraudulent. To ensure that most instances of fraud are captured, however, such techniques generally have a low threshold for triggering a fraud alert. As a result, numerous fraud alerts are false positives. The prevalence of false positives leads to a large cost in terms of the drain on human resources (e.g., calling customers to discuss each suspect transaction, and/or other manual investigation techniques), and considerable distraction or annoyance for cardholders. To provide a solution to these shortcomings in the field of automated fraud detection, innovative processing techniques capable of reducing false positives are needed.

“Other conventional processes relating to financial fraud are likewise resource-intensive. For example, card issuers today perform manual reviews of fraudulent transactions to determine whether, under the lengthy and complex rules of a particular card network, chargebacks are appropriate (i.e., payments from the merchant or acquiring/merchant bank back to the card issuer). These manual reviews are another significant drain on human resources, and may be subject to human error. Moreover, failure to properly identify chargeback scenarios may cost the card issuer money.

“As another example, application fraud (e.g., obtaining a loan in the name of another person) may sometimes not be discovered until the loan has been made. By that point in time, any losses might not be fully recoverable.”

Supplementing the background information on this patent, NewsRx reporters also obtained the inventors’ summary information for this patent: “The present embodiments may, inter alia, automatically flag potential chargeback scenarios for further processing under the chargeback rules of a card network entity. The detection of such scenarios may be based upon various types of information, and the rules used to detect such scenarios may be generated by a machine learning program.

“In one embodiment, a computer-implemented method of identifying a merchant computer terminal warranting a chargeback includes: (1) identifying, by one or more processors, a merchant computer terminal associated with a fraudulent financial transaction; (2) receiving, by the one or more processors, information associated with the merchant computer terminal, the information associated with the terminal including one or more of (i) an actual configuration, (ii) parameters, or (iii) specifications, associated with the merchant computer terminal; (3) receiving, by the one or more processors, up-to-date dispute rules associated with chargebacks; (4) analyzing, by the one or more processors, the dispute rules to determine merchant computer terminal requirements; (5) comparing, by the one or more processors, the determined merchant computer terminal requirements with the information associated with the merchant computer terminal to identify whether the merchant computer terminal is compliant with the dispute rules; (6) based upon the comparison, either: (i) generating, by the one or more processors, an electronic notification that includes an identification of the fraudulent financial transaction, a transaction amount, and an indication that a chargeback is warranted due to the merchant computing terminal being non-compliant with the dispute rules; or (ii) generating, by the one or more processors, an electronic notification that includes an identification of the fraudulent financial transaction and an indication that a chargeback is not warranted due to the merchant computing terminal being compliant with the dispute rules; and/or (7) transmitting, by one or more transceivers, the electronic notification to a merchant computing device over one or more radio frequency links to facilitate resolving financial transaction disputes. The method may include additional, less, or alternate actions, including those discussed elsewhere herein.

“In another embodiment, a computer system configured to identify whether merchant computer terminals warrant chargebacks includes one or more transceivers and one or more processors. The one or more processors are configured to: (1) identify a merchant computer terminal associated with a fraudulent financial transaction; (2) receive, via the one or more transceivers, information associated with the merchant computer terminal, the information associated with the terminal including one or more of (i) an actual configuration, (ii) parameters, or (iii) specifications, associated with the merchant computer terminal; (3) receive up-to-date dispute rules associated with chargebacks; (4) analyze the dispute rules to determine merchant computer terminal requirements; (5) compare the determined merchant computer terminal requirements with the information associated with the merchant computer terminal to identify whether the merchant computer terminal is compliant with the dispute rules; (6) based upon the comparison, either: (i) generate an electronic notification that includes an identification of the fraudulent financial transaction, a transaction amount, and an indication that a chargeback is warranted due to the merchant computing terminal being non-compliant with the dispute rules; or (ii) generate an electronic notification that includes an identification of the fraudulent financial transaction and an indication that a chargeback is not warranted due to the merchant computing terminal being compliant with the dispute rules; and/or (7) transmit the electronic notification to a merchant computing device over one or more radio frequency links to facilitate resolving financial transaction disputes. The computer system may include additional, less, or alternate functionality, including that discussed elsewhere herein.

“In another embodiment, a non-transitory, computer-readable medium stores instructions that, when executed by one or more processors, cause the one or more processors to: (1) identify a merchant computer terminal associated with a fraudulent financial transaction; (2) receive information associated with the merchant computer terminal, the information associated with the terminal including one or more of (i) an actual configuration, (ii) parameters, or (iii) specifications, associated with the merchant computer terminal; (3) receive up-to-date dispute rules associated with chargebacks; (4) analyze the dispute rules to determine merchant computer terminal requirements; (5) compare the determined merchant computer terminal requirements with the information associated with the merchant computer terminal to identify whether the merchant computer terminal is compliant with the dispute rules; (6) based upon the comparison, either: (i) generate an electronic notification that includes an identification of the fraudulent financial transaction, a transaction amount, and an indication that a chargeback is warranted due to the merchant computing terminal being non-compliant with the dispute rules; or (ii) generate an electronic notification that includes an identification of the fraudulent financial transaction and an indication that a chargeback is not warranted due to the merchant computing terminal being compliant with the dispute rules; and/or (7) transmit the electronic notification to a merchant computing device over one or more radio frequency links to facilitate resolving financial transaction disputes.”

The claims supplied by the inventors are:

“1. A computer-implemented method of identifying a merchant computer terminal warranting a chargeback, the method comprising: training a machine learning program using multi-account data representing first financial transactions of at least a thousand accounts and dispute rules, the multi-account data including: technical specifications and internet protocol (IP) addresses associated with first merchant computer terminals associated with the first financial transactions, and data representing chargeback outcome labels associated with the first financial transactions; generating, using the trained machine learning program, updated dispute rules including updated first merchant computer technical specifications related to technical capabilities or hardware of merchant computer terminals associated with transactions warranting a chargeback, where a merchant terminal that is non-compliant with the technical specifications of the updated dispute rules warrants a chargeback; determining that a second financial transaction, different from the first financial transactions and associated with a second merchant computer terminal that is different from the first merchant computer terminals, is fraudulent; receiving, by one or more processors and based on the determining that the second financial transaction is fraudulent, information associated with the second merchant computer terminal including an IP address and technical specifications of the second merchant computer terminal; determining, based at least in part on a comparison of the updated dispute rules including the updated first merchant computer technical specifications with the received information associated with the second merchant computer terminal, that the second merchant computer terminal is non-compliant with the generated updated dispute rules; generating, based upon the determining that the second merchant computer terminal is non-compliant with the updated dispute rules and by the one or more processors, an electronic notification that includes an identification of the second financial transaction, a transaction amount of the second financial transaction, and an indication that a chargeback for the second merchant computing terminal is warranted; and transmitting, by one or more transceivers, the electronic notification to a computing device associated with a merchant associated with the second merchant computer terminal, the electronic notification, which when received at the computing device is configured to cause the computing device to automatically apply the chargeback to a financial institution for the transaction amount of the fraudulent second financial transaction.

“2. The computer-implemented method of claim 1, wherein: the dispute rules are associated with a credit card issuer.

“3. The computer-implemented method of claim 2, wherein the technical specifications relate to at least one of a chip card reader or a swipe card reader.

“4. The computer-implemented method of claim 1, further comprising: identifying the second merchant computer terminal based at least in part on the IP address of the second merchant computer terminal.

“5. The computer-implemented method of claim 1, wherein: receiving the information associated with the second merchant computer terminal includes retrieving the information associated with the second merchant computer terminal from a remote memory unit over one or more radio links.

“6. The computer-implemented method of claim 1, further comprising: sending the updated dispute rules to a remote memory unit over one or more radio links.

“7. The computer-implemented method of claim 1, further comprising: displaying, via a user interface of a computing device associated with a card issuer, the identification of the second financial transaction, the transaction amount, and the indication that a chargeback is warranted due to the second merchant computing terminal being non-compliant with the updated dispute rules.

“8. A computer system configured to identify whether merchant computer terminals warrant chargebacks, the computer system comprising: one or more transceivers; and one or more processors configured to: train a machine learning program using multi-account data representing first financial transactions of at least a thousand accounts and dispute rules, the multi-account data including: technical specifications and internet protocol (IP) addresses associated with first merchant computer terminals associated with the first financial transactions, and data representing chargeback outcome labels associated with the first financial transactions; generate, using the trained machine learning program, updated dispute rules including updated first merchant computer technical specifications related to technical capabilities or hardware of merchant computer terminals associated with transactions warranting a chargeback, where a merchant terminal that is non-compliant with the technical specifications of the updated dispute rules warrants a chargeback; determine that a second financial transaction, different from the first financial transactions and associated with a second merchant computer terminal that is different from the first merchant computer terminals, is fraudulent; receive, via the one or more transceivers and based on the determining that the second financial transaction is fraudulent, information associated with the second merchant computer terminal including an IP address and technical specifications of the second merchant computer terminal; determine, based at least in part on a comparison of the updated dispute rules including the updated first merchant computer technical specifications with the received information associated with the second merchant computer terminal, that the second merchant computer terminal is non-compliant with the generated updated dispute rules; generate, based upon the determining that the second merchant computer terminal is non-compliant with the updated dispute rules and by the one or more processors, an electronic notification that includes an identification of the second financial transaction, a transaction amount of the second financial transaction, and an indication that a chargeback for the second merchant computing terminal is warranted; and transmit, by one or more transceivers, the electronic notification to a computing device associated with a merchant associated with the second merchant computer terminal, the electronic notification, which when received at the computing device is configured to cause the computing device to automatically apply the chargeback to a financial institution for the transaction amount of the fraudulent second financial transaction.

“9. The computer system of claim 8, wherein: the updated dispute rules are associated with a credit card issuer.

“10. The computer system of claim 9, wherein the technical specifications relate to at least one of a chip card reader or a swipe card reader.

“11. The computer system of claim 8, wherein: the one or more processors are configured to identify the second merchant computer terminal associated with the second financial transaction based at least in part on the IP address of the second merchant computer terminal.

“12. The computer system of claim 8, wherein: the one or more processors are configured to receive information associated with the second merchant computer terminal at least by retrieving the information associated with the second merchant computer terminal from a remote memory unit over one or more radio links.

“13. The computer system of claim 8, wherein: the one or more processors are configured to transmit the updated dispute rules to a remote memory unit over one or more radio links.”

There are additional claims. Please visit full patent to read further.

For the URL and additional information on this patent, see: Batra, Reena. Identifying chargeback scenarios based upon non-compliant merchant computer terminals. U.S. Patent Number 11037159, filed March 22, 2017, and published online on June 15, 2021. Patent URL: http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=11037159.PN.&OS=PN/11037159RS=PN/11037159

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