Registers – Systems controlled by data bearing records – Credit or identification card systems
Reexamination Certificate
1998-10-28
2001-02-06
Le, Thien M. (Department: 2876)
Registers
Systems controlled by data bearing records
Credit or identification card systems
C235S382500
Reexamination Certificate
active
06182894
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Technical Field
The present invention relates, generally, to transaction card fraud reduction systems and methods and, more particularly, to verifying that a consumer is in possession of a transaction card and/or is the true card owner during a purchase transaction.
2. Background Information
Transaction cards such as, for example, credit cards, debit cards, bank cards, charge cards, smart cards and the like, have become increasingly popular for purchasing goods and services and for conducting other transactions. A transaction card typically includes information related to the issuer's name and logo, an account number, an expiration date and the cardholder's name. The cards may also have other information, serial number and/or the like printed on the card to represent other information about the transaction card or about the card member such as, for example, a group number, a promotion number, a card type number, a plastic issuance number and/or the like. Certain information is often embossed on the card with raised print, thereby allowing the information to be imprinted on a charge slip; however, the information that is unembossed (flat) would not be imprinted onto the charge slip. For many transaction cards, the information printed on the card is also contained within a magnetic stripe, a bar code and/or an integrated circuit (microchip) for automatic downloading/reading by a card reader.
Many card transactions are commenced by inserting, or sliding a card through, a card reader which automatically downloads the card information, thereby allowing the information to be used during the authorization process without the need for manual input or review of the card information. However, because of the substantial increase in fraudulent use and theft of transaction cards, the use of the card information is often supplemented by various fraud prevention techniques, such as requiring a signature to verify the consumer's agreement to the transaction or the entry of a PIN number to verify the consumer's authority to use the transaction card.
Additionally, certain card issuers, such as banks, incorporate the consumer's picture onto the face of the transaction card to give the merchant an additional verification procedure.
While the use of a signature, PIN or picture is effective for fraud reduction when the cardholder presents a card to a merchant, these options are not as effective, and may not be available, for other transactions. Particularly, transactions which do not require face-to-face contact between a consumer and merchant, such as the use of a transaction card to purchase items through the Internet or over the telephone (e.g., mail order). Moreover, many transactions may be alternatively completed without using the physical transaction card. For example, a consumer or merchant may simply key in the transaction card number into the keypad of a POS device or the keypad on an ATM.
When conducting Internet, telephone or keypad transactions, a cardholder may only need to provide a card account number and expiration date to allow the merchant to charge a particular account and verify that the transaction card is valid. Other verification information, such as a PIN number, is usually not disclosed because the PIN is typically memorized by the cardholder and never disclosed to anyone. Because merchants often only request limited information to conduct a transaction over the Internet or the telephone, an increased potential for fraud exists due to the increased availability of this general information. In other words, regardless of a consumer's possession of the physical transaction card, a consumer can still fraudulently obtain and provide this general information.
Particularly, cardholders often provide a transaction card number to telemarketers, merchants, bank tellers and Internet sites, thereby allowing a merchant or clerk to retain the credit card number and associated information for later fraudulent use. Moreover, a person may overhear a transaction card number being disclosed over the telephone or, with the increase of mailbox thefts, a person may obtain a credit card number from a billing statement or promotional literature. Furthermore, advanced computer operators are able to intercept transaction card numbers which are transmitted over modems and/or the Internet. Accordingly, when a merchant simply requests a credit card number from a consumer, it is difficult for the merchant to ensure that the consumer placing the order has the transaction card in his or her possession and/or is the true cardmember, rather than using a stolen account number.
As stated above, the use of PIN numbers are typically limited to face-to-face or ATM transactions wherein the consumer personally enters a PIN into a keypad and the merchant does not need to have knowledge of the PIN. In non face-to-face transactions, the PIN would need to be disclosed to the merchant. However, due to security concerns, consumers prefer to not disclose their private PIN number to merchants and especially prefer to not disclose the PIN number over a telephone or through the Internet. Particularly, a PIN number is directly associated with the account number, and as such, may provide increased access to a transaction card account during a fraudulent transaction. Accordingly, a system is needed which allows the consumer to disclose a security number which is associated with the account number, but does not allow automatic access to the account.
BRIEF SUMMARY OF THE INVENTION
Due to security concerns during non face-to-face commercial transactions, consumers prefer to not disclose their private PIN number to merchants and especially prefer to not disclose the PIN numbers over a telephone or through the internet. Instead of a PIN which is associated with an account and provides access to an account, a card identification code, which is located on the card but does not provide automatic access to an account, is used to verify that the consumer currently possesses the transaction card at the time of purchase and/or is the true card owner.
Along with the account number, a transaction card includes a non-embossed four-digit or three-digit number, called a card identification code. During creation of a transaction card, a five-digit identification code is calculated from the account number, four-digit or three-digit identification code and the expiration date based upon a predetermined algorithm. A four-digit identification code is printed on the front of the card, an associated five-digit identification code is entered into the magnetic stripe and an associated three-digit identification code is printed in the signature panel. An embossing file of account numbers including associated identification codes is created and loaded into the account database. At the time of authorization, the four-digit number on the front of the card and the account number are manually keyed into a POS device and sent to an authorization system. The four-digit number is matched to the four-digit number on file for that transaction card. If the four-digit numbers match, and other authorization parameters are satisfied, the transaction card is authorized.
Alternatively, when the card is swiped through a POS device, the five-digit number previously entered into the magnetic stripe, along with other information, is automatically transmitted to the authorization system. The five-digit number is decomposed using a mathematical algorithm, and the resulting three-digit and/or four-digit numbers are matched against the database record (which includes the originally assigned three or four-digit identification codes for the account number). If the respective three or four-digit numbers match, and other authorization parameters are satisfied, the transaction card is authorized.
Thus, the entry of an additional identification code helps verify that the consumer currently possesses the transaction card at the time of purchase or is the true card owner, rather than simply using a stolen account number. A
Arnold Lisa
Hackett Ann
Jordan Vickie
American Express Travel Related Services Company Inc.
Le Thien M.
Snell & Wilmer L.L.P.
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