Identity Verification System for Fraud Risk Assessment
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Solution Overview
Problem
Financial institutions face challenges in verifying the identity of customers and assessing the risk of fraud, account abuse, and identity theft due to advancements in counterfeiting technology and the rise of identity theft, necessitating improved methods for evaluating the credibility of identification documents and potential business partners.
Innovation Solution
A system and method for identifying individuals and evaluating risk by receiving identity information, validating credentials against positive databases, screening against negative databases for past losses, and generating risk ratings based on specific criteria, with the option to submit and credit fees for reported losses, utilizing a custodian system that maintains databases for credential validation, identity verification, and risk scoring.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional visual inspection methods are used to verify identification documents, then the process is simple and quick, but the ability to detect counterfeit documents deteriorates due to advances in counterfeiting technology
Solution Approach 1:
The patent introduces an intermediary verification system that acts as a mediator between the identification document and the verification decision. This system includes database queries, algorithmic analysis, and cross-referencing mechanisms that objectively evaluate identification credibility without requiring complex physical inspection equipment. The intermediary system processes identification data through multiple verification layers including database matching and risk assessment algorithms.
Solution Approach 2:
The patent replaces manual visual inspection (mechanical human judgment) with automated electronic verification systems. This substitution uses computer-based database queries, algorithmic risk assessment, and automated cross-referencing to evaluate identification documents, eliminating the need for complex physical inspection tools while improving reliability through consistent automated decision-making.
2Reliability
If comprehensive identity verification procedures are implemented as required by the USA Patriot Act, then security and fraud prevention improve, but processing time and operational complexity increase
Solution Approach 1:
The patent implements preliminary action by pre-establishing comprehensive databases containing identification information, fraud indicators, and risk factors before verification is needed. The system pre-processes and organizes verification data, so when an actual verification occurs, the system can quickly query and compare against pre-prepared reference data, reducing processing time while maintaining comprehensive verification coverage.
Solution Approach 2:
The patent ensures continuity of useful action by implementing real-time, continuous verification processes that operate seamlessly during transactions. The system continuously queries databases, updates risk assessments, and provides verification results without interrupting the business flow. This allows comprehensive verification to occur in the background continuously rather than as a discrete time-consuming step.
3Measurement precision
If multiple databases and verification criteria are used to assess risk, then the accuracy of risk evaluation improves, but the complexity of the screening process increases
Solution Approach 1:
The patent merges multiple verification functions into a unified risk assessment system. Instead of treating database queries, fraud detection, and risk scoring as separate complex processes, the system combines them into an integrated verification platform that simultaneously processes multiple criteria and databases, producing a single comprehensive risk evaluation result.
Solution Approach 2:
The patent creates a universal verification system that handles multiple verification functions through a single platform. The system is designed to query various databases, apply different verification criteria, and assess multiple risk factors all through one multi-functional interface, reducing the perceived complexity by providing a unified approach to comprehensive verification.
Data Source
AI summary
Methods, systems, and machine-readable media are disclosed for identification of an individual and evaluation of risk from doing business with that individual. In one embodiment a method of evaluating a risk from conducting business with an individual comprises receiving identity information related to the individual. The identity information includes information from an identity credential presented by the individual. The identity credential is validated based on the information from the identity credential and one or more positive databases. An identity of the individual is verified based on the identity information and the one or more positive databases. The identity information is screened against one or more negative databases indicating past losses to one or more entities. Results of the screening are reported based on one or more criteria of an entity considering doing business with the individual.