Blockchain Smart Contract Fraud Detection
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Solution Overview
Problem
Corporate reimbursement systems face significant challenges with fraud, including bill tampering and duplicate submissions, and fail to accurately reflect cashback or redemption amounts in mobile applications.
Innovation Solution
Implementing a blockchain-based system that uses smart contracts to verify transaction information and modify block status, limiting access to reimbursement records after an initial verified process, thereby preventing fraud.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If a traditional reimbursement system is used, then employees can submit bills for reimbursement, but the system is vulnerable to fraud such as bill tampering and duplicate submissions
Solution Approach 1:
The patent introduces a blockchain network as an intermediary between employees and enterprises. The blockchain stores transaction records in a decentralized, immutable manner, serving as a trusted mediator that prevents fraud without requiring complex centralized verification systems. The smart contract acts as an automated intermediary that verifies transaction authenticity and manages cashback distribution.
Solution Approach 2:
The patent replaces traditional mechanical reimbursement verification processes (manual bill checking, duplicate detection) with cryptographic mechanisms. Blockchain's cryptographic hashing and digital signatures automatically verify transaction authenticity, eliminating the need for complex manual verification systems while enhancing fraud prevention.
2Reliability
If blockchain technology is implemented, then fraud detection and prevention is enhanced, but system complexity increases
Solution Approach 1:
The smart contract is designed to be self-executing and self-verifying. It automatically checks transaction details against the blockchain record, verifies cashback eligibility, and distributes funds without requiring external intervention. This self-service capability reduces the need for complex external verification systems while maintaining high reliability.
Solution Approach 2:
The blockchain network serves multiple functions simultaneously: it stores transaction records, verifies transaction authenticity, prevents duplicate submissions, and manages cashback distribution. This multi-functionality consolidates what would otherwise require separate complex systems into a single unified platform.
3Reliability
If access to transaction records remains open, then transparency is maintained, but fraud through duplicate submissions cannot be prevented
Solution Approach 1:
The smart contract performs preliminary verification of transaction records before allowing reimbursement. It checks the blockchain for existing transaction hashes and cashback status beforehand, preventing duplicate submissions and fraudulent claims before they can be processed. This preliminary action maintains security while preserving necessary transparency.
Solution Approach 2:
The system applies different access levels to different data: transaction details remain transparent and accessible for verification, while reimbursement status and cashback information are protected until verification is complete. This localized quality control maintains necessary transparency while preventing fraud through selective information protection.
Data Source
AI summary
Methods, apparatus, and processor-readable storage media for detecting cashback and other related reimbursement frauds are provided herein. An example computer-implemented method includes implementing, in response to a transaction between a user and a first enterprise, a block in a blockchain network, wherein the block comprises transaction-related information comprising reimbursement-related data and cryptographic information; generating a smart contract in conjunction with the block, wherein the smart contract comprises a software protocol pertaining to carrying out a reimbursement process, related to the transaction, between the user and a second enterprise; executing the smart contract in response to an indication that transaction-related information provided to the second enterprise by the user has been verified against the transaction-related information contained within the block; and modifying, in response to the execution of the smart contract, a status identifier of the block, wherein the modification of the status identifier reduces subsequent access to the block.