Authentication System for Real-Time Fraud Detection
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Solution Overview
Problem
Current fraud detection systems for online transactions are either retroactive, failing to prevent completed fraudulent transactions, or overly complicated and inconvenient for customers, leading to potential lost sales due to excessive security protocols.
Innovation Solution
An authentication system that collects device and contextual data to compute device, customer, and payment scores, determining transaction legitimacy before completion, simplifying the checkout process for non-fraudulent transactions while initiating additional security protocols for suspicious ones.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If retroactive fraud detection mechanisms are used, then fraudulent transactions can be identified after occurrence, but the transactions cannot be prevented as they are already completed
Solution Approach 1:
The patent implements pre-transaction fraud detection by collecting device data and contextual data before the transaction is completed. The authentication system computes device scores, customer scores, and overall fraud scores in advance, allowing fraudulent transactions to be identified and blocked before funds are transferred, thus preventing loss rather than merely detecting after the fact
2Reliability
If additional security protocols are implemented for fraud detection, then fraudulent transactions can be prevented, but the checkout process becomes overly complicated and inconvenient for customers
Solution Approach 1:
The patent applies fraud detection selectively based on computed risk scores. Transactions with low overall scores proceed through a simplified checkout process without additional security steps. Only transactions with high fraud risk scores trigger additional authentication protocols such as 3D Secure verification, customer service contact, or device fingerprinting. This partial application of security measures prevents fraud while maintaining ease of operation for legitimate transactions
Data Source
AI summary
A system and method include receiving, by an authentication system, device data of a computing device used by a customer during a checkout process of a current transaction on a merchant website and contextual data of the customer. The system and method also include retrieving a customer token associated with a payment instrument of the customer, assigning the computing device a device score and the customer a customer score based on the device data and the contextual data, and computing an overall score from the device score and the customer score. The system and method further include determining from the overall score that the current transaction is not fraudulent before the current transaction is completed and auto-filling payment information of the payment instrument in the customer token during the checkout process of the merchant website to complete the current transaction upon determining that the current transaction is not fraudulent.