Refund Tracking System for Cross-Merchant Fraud Detection
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Solution Overview
Problem
Existing systems fail to detect fraudulent return and refund patterns distributed across multiple merchants, as refund data is stored in merchant-specific data structures, making it difficult to coordinate and detect fraud across different merchants, and they only intervene after the return/refund policy is offered, limiting their effectiveness.
Innovation Solution
A refund tracking system that harmonizes and aggregates refund data from multiple merchants into a unified database, using a processor to receive and parse transaction data, determine a refund risk score, and transmit it to the merchant terminal in real-time, allowing for intervention before the purchase is completed.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If refund data is stored in merchant-specific data structures, then each merchant can maintain its own refund tracking system, but it becomes difficult or impossible to coordinate refund data between merchants
Solution Approach 1:
The patent merges refund data from multiple merchant-specific data structures into a centralized refund tracking database. The system consolidates refund information that was previously siloed in individual merchant systems, enabling cross-merchant fraud detection while preserving the original data sources through standardized access interfaces.
Solution Approach 2:
The patent introduces a centralized refund tracking database as an intermediary layer between merchant-specific systems and fraud detection algorithms. This mediator standardizes data access across different merchants, enabling coordination without requiring changes to individual merchant data structures.
2Ease of operation
If existing systems only intervene at the point of return/refund, then they can process refunds according to policy, but they cannot predict or prevent fraud before it occurs
Solution Approach 1:
The patent performs preliminary fraud risk assessment by analyzing refund patterns in the centralized database before a return/refund transaction is processed. The system proactively identifies high-risk transactions and alerts merchants in advance, enabling preventive action rather than reactive processing.
Solution Approach 2:
The patent implements a feedback loop where refund transaction data is continuously fed into the centralized database, analyzed for patterns, and used to generate risk assessments that feed back to merchants for real-time decision-making. This closed-loop system improves both fraud detection and refund processing.
3Object-affected harmful factors
If consumers distribute fraudulent activity over multiple merchants, then they can avoid detection by single-merchant systems, but this increases the complexity of detecting coordinated fraud patterns
Solution Approach 1:
The patent combines refund data from multiple merchants into a single centralized database, enabling the detection of fraud patterns that span across different merchants. By merging previously siloed data sources, the system can identify coordinated fraudulent behavior that would be invisible to individual merchant systems.
Data Source
AI summary
A refund tracking (RT) computing device including a processor and a memory in communication with the processor is provided. The RT computing device is configured to receive historical transaction data from a payment network or a merchant data source, the historical transaction data received in different formats, parse data fields from the historical transaction data, store the parsed data fields for each of the transactions in a respective harmonized refund data structure in a database, receive current transaction data for a current transaction from a merchant computing device, retrieve at least one harmonized refund data structure from the database, determine a refund risk score based on comparing the current transaction data to the at least one harmonized refund data structure, and transmit the refund risk score to the merchant terminal.