Dynamic Consumer Rating System for Fraud Risk Assessment
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Solution Overview
Problem
Current payment systems, particularly in remote transactions, face significant challenges with fraudulent activities and inadequate assessment of consumer credit risk due to limited data availability, leading to increased financial losses for credit issuers and decreased consumer confidence.
Innovation Solution
A computer-implemented method and system for dynamic consumer rating that collects and processes a merchant-based consumer/transaction data set, third-party credit history data, and credit issuer credit history data in real-time to determine a consumer rating index variable using a scoring formula, enabling more accurate assessment of credit risk, fraud risk, and profitability.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If credit is issued to consumers using traditional payment methods, then consumer convenience is improved, but transactional security and fraud prevention deteriorate
Solution Approach 1:
The patent implements dynamic consumer rating that updates in real-time during transactions, allowing the system to adapt credit decisions based on current transaction context and consumer behavior patterns, thereby maintaining security without sacrificing convenience
Solution Approach 2:
The system incorporates continuous feedback loops where transaction data, consumer responses, and behavioral patterns are fed back into the rating model to continuously refine risk assessment, enabling secure credit issuance with improved fraud detection
2Adaptability or versatility
If remote purchase channels (Internet, mail order, telephone) are expanded, then consumer accessibility is improved, but fraud risk and transactional security deterioration
Solution Approach 1:
The patent introduces an intermediary rating system that acts as a mediator between remote consumers and merchants, providing real-time risk assessment and authorization decisions that enable secure remote transactions across multiple channels without requiring physical proximity
3Productivity
If static credit assessment is performed during application process, then credit issuance speed is improved, but accuracy of ongoing risk assessment deteriorates
Solution Approach 1:
The system transitions from static application-based assessment to dynamic real-time rating that continuously updates consumer risk profiles during transactions, maintaining fast credit decisions while improving ongoing risk assessment accuracy through continuous data collection and analysis
Data Source
AI summary
Disclosed is a computer-implemented method (100) of rating a consumer in connection with a transaction initiated by the consumer and requesting credit from a credit issuer (28). The method (100) includes the steps of: providing a merchant-based consumer/transaction data set (16) to a central credit issuer database (20); providing a third party credit history data set (24) to the central credit issuer database (20); providing a credit issuer credit history data set (30) to the central credit issuer database (20); determining a consumer rating index variable (12) based upon a scoring formula (34) utilizing at least one data field from the provided data sets; and presenting the consumer rating index variable (12) to the credit issuer (28). A system (10) and apparatus (50) for rating the consumer in connection with this transaction is also disclosed.