Digital Wallet Liability Shifting via Device Attribute Verification

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Solution Overview

Problem

Merchants currently bear the risk of fraudulent e-commerce transactions, lacking effective mechanisms to shift liability to transaction account issuers due to insufficient verification of transaction authenticity.

Innovation Solution

A digital wallet system that associates transaction account holders with attributes, allowing for enhanced authorization and liability shifting by using APIs to verify transaction authenticity and issue challenges to account holders, thereby determining liability between merchants and transaction account issuers.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If merchants bear the risk of fraudulent transactions, then transaction security is maintained, but merchant financial loss increases

Engineering Contradiction:

Improvetransaction securityVSAvoidmerchant financial loss

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

The patent introduces an authorization computer-based system as an intermediary that mediates between merchants and transaction account issuers. This system collects device attributes, verifies them against stored attributes, and determines fraud liability based on verification results. The intermediary shifts the burden of fraud verification from merchants to the authorization system, which then shifts financial liability to the transaction account issuer when fraud is detected, resolving the contradiction between maintaining security and preventing merchant financial loss.

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system performs preliminary actions by collecting and storing device attributes (such as device identifiers, screen resolution, operating system information) before transactions occur. These pre-collected attributes are used during transaction authorization to quickly verify device authenticity without burdening the merchant. By performing verification准备工作 in advance, the system enables rapid fraud detection and liability shifting, maintaining security while protecting merchants from financial loss.

Inventive Principle:

Principle #10Preliminary action

2Measurement precision

If enhanced authentication processes are implemented, then fraud detection capability improves, but system complexity increases

Engineering Contradiction:

Improvefraud detection capabilityVSAvoidsystem complexity

Core Design Contradiction:

Measurement precisionVSDevice complexity

Solution Approach 1:

The system implements self-service by automatically collecting device attributes from the customer's device without requiring manual input or merchant intervention. The authorization computer-based system autonomously gathers attributes such as device identifiers, screen resolution, and operating system information, then automatically compares these against stored attributes to determine fraud liability. This automated self-service approach enhances fraud detection precision while minimizing the complexity burden on merchants and users.

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The authorization computer-based system serves multiple functions: it collects device attributes, verifies transaction authenticity, determines fraud liability, and shifts financial responsibility. By consolidating these multiple functions into a single universal system, the patent avoids the complexity that would arise from separate systems for each function, while still achieving high fraud detection capability through comprehensive attribute verification.

Inventive Principle:

Principle #6Universality (Multi-functionality)

3Object-affected harmful factors

If liability shifting mechanisms are established, then merchant risk exposure decreases, but verification requirements increase

Engineering Contradiction:

Improvemerchant risk exposureVSAvoidverification requirements

Core Design Contradiction:

Object-affected harmful factorsVSDifficulty of detecting and measuring

Solution Approach 1:

The patent replaces manual or mechanical verification processes with automated electronic attribute comparison. Instead of requiring merchants to manually verify device identity or conduct complex investigations, the system electronically collects device attributes and automatically compares them against stored attributes using computer-based algorithms. This substitution of electronic automation for manual verification reduces merchant risk exposure while making the verification process more efficient and less burdensome.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS20240289803A1Systems and methods for fraud liability shifting

Publication Date: 2024.08.29 AMERICAN EXPRESS TRAVEL RELATED SERVICES CO INC

AI summary

A method comprising creating, by a computer-based system for shifting financial responsibility for a transaction from a merchant to a transaction account issuer, a digital wallet associated with a transaction account holder, wherein the digital wallet comprises one or more attributes associated with the transaction account holder, confirming, by the computer-based system, the attribute in response to a transaction request, and/or determining, by the computer-based system, whether to shift financial responsibility for the transaction from the merchant to the transaction account issuer.