FRAUD PREVENTION TECHNOLOGIES
FOR REMOTE COMMERCIAL TRANSACTIONS
(U.S. AND PCT PATENT PENDING)

 In recent years, a great number of approaches and technologies have been introduced and/or proposed to reduce the incidence of fraudulent on-line transactions. Generally, these solutions are split into several categories, with certain solutions falling into more than one category:

• CFD Protection (e.g., encryption of CFD data before, during, and/or after transmission);
  
• Consumer Identity Verification (e.g., verification that the individual placing an on-line order is in fact the consumer to whom the CFD belongs, as accomplished through software using consumer-entered security codes, through hardware, such as biometric (fingerprint, retina, palm, voice pattern) scanners, key cards and readers, global positioning systems, or via a combination of both software and hardware technologies); and
  
• Use of Secure Third Party Agents (e.g., an third party organization that securely holds the CFD and that communicates with and acts as an intermediary between, the customer, the merchant and the customer’s financial service provider (FSP), so that the CFD is never sent to the merchant directly).

 However, all of the above approaches suffer from a number of disadvantages that make them cumbersome, expensive, impractical, or otherwise difficult to implement:

• Requirements for changes in current commercial transaction infrastructure, (which is virtually impossible or impractical), or that add a significant per-transaction expense, such as use of third party secure agents;
  
• Requirements for special software and/or hardware for one or more of the involved parties (i.e., customer, merchant, FSP, etc.). One popular recently offered approach requires a biometric sensor (such as a fingerprint scanner) to be utilized by the customer in conjunction with a software program installed on the customer’s computer. Prior to conducting an on-line transaction, the customer’s identity was authenticated by the biometric device. However, this approach requires customers to purchase expensive hardware and to deal with complex biometric software, and so far has failed to capture consumer confidence and approval; and
  
• Requirements that the customers memorize special passwords, codes, and/or PIN numbers - something which the consumers typically resist or circumvent.

 In addition, most of the previously known solutions have been limited to attempts to prevent fraudulent on-line transactions, and thus cannot be utilized to address fraud issues in other types of purchase transactions (e.g., telephone, facsimile, or mail order transactions).

 Unsurprisingly, criminal parties have kept up with technological developments, finding new ways to steal CFD, or to utilize misappropriated CFD to engage in on-line and other types of fraud. This resulted in banks and other financial institutions having to provide added assurances (such as promises of insurance coverage for fraud and identity theft) to appease the worried public, while at the same time combating the steadily increasing cost-per-transaction. Nevertheless, the vast majority of consumers are still wary of making on-line purchases, and while the growth of Internet commerce is very impressive, it is still far from its maximum potential.

 It is widely believed that consumer confidence in on-line commerce cannot be readily elevated until there is a cost effective, simple, and secure way to: (1) prevent misappropriation of CFD resulting from on-line commercial transactions; and/or (2) to verify that an on-line order for which payment to a merchant is required from a specific customer’s financial service provider, was in fact placed by the customer.