Visa patent blacklists devices used for fraud
Mobile and online payments security may be one of the hottest topics in the industry today, and Visa has been granted a patent that could help in a big way by identifying and “blacklisting” a device that’s been used to perpetrate fraud, preventing the device from being used again for fraudulent purposes.
Filed on July 22, 2009, by a Visa Inc. affiliate, the patent application describes a system that uses “a process to identify consumer or merchant devices that have been used in fraudulent transactions and prevent[s] the authorization of future transactions that are initiated using those devices.” For instance, a computer or mobile phone could be flagged using by its IP address or mobile phone identifier if it’s been found to have been involved in a certain number of transactions found to be fraudulent. Once blacklisted, payment authorization requests via the device could be automatically declined by the payment processor. Alternatively, an automatic notification of the device’s blacklist status could be made to the merchant involved in the transaction.
By focusing on the device, the system would have the advantage of being able to draw upon evidence of previous fraud attempts using that device to protect merchants subsequently targeted, according to the application. The system also would prevent fraud attempts using multiple accounts from the same device. Meanwhile, the technology could protect consumers by identifying fraudulent use of a device operated by a merchant—such as a POS terminal—or being used to mimic transactions from a reputable merchant.
Although the patent application was published in early 2011, Visa actively has been pursuing other initiatives to fight fraud. In 2014, the network launched its Prepaid Clearinghouse Service, the first industry-wide database to detect and prevent fraud schemes that target prepaid cards.
The previous year, Visa teamed up with Toronto-based fraud-identification firm Ethoca to expand available data about confirmed fraudulent transactions with a broader base of issuers and merchants. And the company’s efforts are proving effective in stemming fraud. Gas stations that used another Visa anti-fraud tool experienced a 54 percent decline in counterfeit fraud rates and a 51 percent decline in lost and stolen fraud chargeback rates, the network reported in 2014.
