Fraud Risk Assessment System for Electronic Transactions
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Solution Overview
Problem
Existing systems lack effective mechanisms to assess and mitigate the risk of fraud in electronic transactions, particularly in cases where cyber-attacks deceive users into transferring funds to fraudulent accounts.
Innovation Solution
A computing system and method that utilize AI to identify potential fraud risks in electronic transactions by calculating a risk score, notifying users, and providing mitigation activities, while also offering fraud insurance with adjustable premiums based on user actions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional electronic transaction systems are used without fraud assessment mechanisms, then transaction processing is simple and fast, but the system is vulnerable to fraud and cyber-attacks
Solution Approach 1:
The system performs preliminary fraud risk assessment before the electronic transaction is completed. The processor calculates a fraud risk score based on beneficiary information and transaction details prior to fund transfer, allowing users to make informed decisions about whether to proceed with the transaction.
Solution Approach 2:
The system introduces an intermediary fraud assessment layer between the user and the transaction processing. This intermediary layer analyzes beneficiary information, calculates risk scores, and provides recommendations without blocking the underlying transaction processing system, thus maintaining simplicity while adding protection.
2Measurement precision
If comprehensive fraud assessment is implemented, then fraud detection capability is improved, but processing time increases
Solution Approach 1:
The system performs partial fraud assessment by calculating risk scores based on selected beneficiary information and transaction characteristics rather than analyzing every possible data point. This partial assessment approach provides sufficient fraud detection capability while maintaining fast processing speeds.
Solution Approach 2:
The system enables users to quickly review the calculated fraud risk score and make rapid decisions about whether to proceed with transactions. The interface allows for fast interaction and decision-making, preventing significant delays in the overall transaction process.
3Loss of information
If users are provided with detailed risk information and mitigation options, then user awareness and security are improved, but user interface complexity increases
Solution Approach 1:
The system segments risk information into distinct, manageable components including fraud risk scores, specific risk factors, and recommended mitigation activities. This segmentation allows users to process information in organized chunks rather than overwhelming them with undifferentiated data.
Solution Approach 2:
The system provides feedback to users about their transaction risk levels and the effectiveness of mitigation activities. The interface shows how user actions (such as verifying beneficiary information) can reduce risk scores, enabling users to actively manage transaction safety while maintaining interface simplicity.
Data Source
AI summary
A system including a processing circuit configured to collect at least first contact information of a beneficiary, identify a risk associated with the beneficiary, automatically calculate a risk score for an electronic transaction based on the risk, determine that the risk score exceeds a first threshold value and displaying a notification on the user device associated with the electronic transaction, receive data from the user device, wherein the data includes at least second contact information corresponding to the beneficiary, compare the first contact information and the second contact information with additional data, wherein comparing includes analyzing the call records or the emails and determining that a user conducted at least one mitigation activity of the displayed mitigation activities, recalculate the risk score based on the at least one mitigation activity, and display the recalculated risk score on the user device.