Patent Application
20090254480
NOT APPLICABLE
NOT APPLICABLE
NOT APPLICABLE
Stored value, gift, or other pre-paid debits cards are well-known for providing access to goods and services. For example, gift cards may be purchased from various merchants such as department stores and restaurants. Pre-paid debit cards are also frequently purchased for telephone services. The purchase and usage of pre-paid debit cards has continued to increase in recent years to the point that the sale of pre-paid debit cards today is a multi-billion dollar industry. Pre-paid cards, such as gift cards issued by a merchant, are advantageous to the merchant because customers using them are more likely to shop the merchant and also more likely to spend beyond the initial value of the gift card. Other prepaid cards may be issued by a bank or money transfer office, and may be used like a credit card to make purchases, up to the balance maintained within the card account.
In some cases, pre-paid debit cards are printed and issued with a predetermined value and balance, and typically sold as a retail item. An example of one such a card is a pre-paid gift card which provides an individual with a set dollar amount for the purchase of goods from a particular merchant. In other cases, a gift card may be printed without a predetermined value, but when it is purchased and activated the customer determines the amount of money to be “loaded” onto the card.
Clearinghouse arrangements have been set up to handle gift card accounts on behalf of merchants. For example First Data Corporation provides database services that merchants may access for activating and maintaining gift card accounts. When the card is purchased, the card is electronically read (e.g., by reading a magnetic stripe on the card) by the merchant in order to obtain an account identifier and then to activate the card (and its associated account) at the database. Once activated, the card is used to make purchases (redemptions) by reading the card at the time of purchase and debiting the purchase amount from the account.
Merchants often market gift cards by prominently displaying them (e.g., near a POS terminal or checkout station), so that a customer may see the various cards offered, and then select the one that best meets the needs of that customer. However, these kinds of arrangements have led to fraud. One fraudulent scheme is known as “skimming.” A thief (sometimes a dishonest store employee), will remove cards from display that have not yet been purchased. The cards are taken to an unauthorized card reader where the card data is collected. The card or cards are then returned to the display. The “stolen” card data is then put on counterfeit “blank” cards for subsequent use by the thief. It does not matter that the original, legitimate card has not been activated, since the thief will simply wait until it has been purchased by a customer at the store, and when activated for that customer, the thief then takes the counterfeit card and uses it to deplete the gift card account before the customer (or the person to whom the customer gives the card) has had a chance to use the legitimate card.
While it is known to use printed security codes on credit cards and similar instruments (for example, printed on the back of a card), such codes are present on the card when issued and can be seen by anyone in possession of the card, and thus will not prevent fraudulent schemes such as skimming.
There is provided, in accordance with embodiments of the present invention, a network/system and method for preventing fraudulent use of a stored value card, by providing a fraud code to be stored on the card when it is activated.
In some embodiments, methods and systems for preventing fraudulent use of a stored value card compromise steps and/or components that include activating the card for use in conducting transactions at a merchant location, storing a fraud code on the card (at a storage medium) when the card is activated at the merchant location, and permitting a transaction to be completed using an activated card only if the fraud code is stored on the card.
In one embodiment, the stored value card is a gift card and the storage medium is a magnetic stripe on the gift card.
A more complete understanding of the present invention may be derived by referring to the detailed description of the invention and to the claims, when considered in connection with the Figures.
There are various embodiments and configurations for implementing the present invention. Generally, embodiments provide systems and methods for preventing fraudulent use of prepaid debit cards, such as gift cards, by storing or writing a fraud or security code on the card after it has been activated for use.
In one embodiment, a gift card is purchased at a POS system or terminal at a merchant location, where a storage medium on the card (in the form of a magnetic stripe), has account information stored thereon. In order to purchase and activate the gift card, the magnetic stripe is read at a card reader at the POS system in order to identify the card and its associated account. When the gift card is activated, a fraud code is written onto the magnetic stripe by a card encoder (writer) at the POS system.
Referring now to
The POS terminals 110 are each connected through a network 120 (which may be public network such as the internet or, alternatively, a private retailer network) to a product/price look-up system 130 (having an associated database 132), to payment systems 136 (which are in turn connected to banking and financial networks), and to a gift card system 140 (having an associated database 142). Briefly, in operation, when a gift card is purchased at a merchant location and presented for purchase at a POS terminal, the card may be presented to a clerk who in turns reads the UPC (uniform product code) present on the card or its packaging, for a product and price look-up. The UPC code is sent to the product/price look-up system, which retrieves from database 132 the purchase price (and a product ID/description corresponding to the UPC code) and returns such data to the POS terminal. The clerk then accepts payment from the customer for the price of the gift card (in some cases, the customer may be able to select the price or amount to be loaded onto the gift card), and if the purchase is made by credit or debit card, such information is sent to the payment system 136 (and from there to the bank or financial institution maintaining the account from which payment is being made).
The clerk then swipes the gift card at the reader/encoder 112 so that a gift card/account number or identifier (ID) is read from the magnetic stripe on the card, and such ID number is sent to the gift card system 140, where the account is verified (such as through comparison to available account numbers stored in database 142). The account is then activated, such as through an activation code or marker bit set within database 142 for the account number or ID associated with the activated card or account.
When the customer who has purchased the gift card (or the recipient to whom it had been given by the customer) then presents the card for a purchase or redemption at a merchant location, the gift card 114 has its magnetic stripe again read at the card reader/encoder 112, so that the account associated with the card may be accessed at gift card system 140, and the account balance debited for the amount of the purchase/redemption.
The gift card network 100 as thus far described is conventional and is well know to those skilled in the art. A more detailed description of exemplary systems and processes used for activating and accessing gift card accounts can be found, for example, in U.S. patent application Ser. No. 11/122,414, filed May 4, 2005, for “System and Method for Accounting for Activation of Stored Value Cards,” by Dean A. Seifert et al., which is hereby incorporated by reference.
In accordance with embodiments of the invention, when the gift card 114 (and its associated gift card account) is activated at one of the POS terminals 112 (as a result of accessing gift card system 140 and its database 142), a fraud code is written onto the magnetic stripe of the card. In one embodiment, the fraud code may be a unique multi-bit code that is generated by gift card system 140 at the time the card is activated, and sent to POS terminal 110 so that it may be electronically written onto the magnetic stripe. That same fraud code may be stored within database 142 in association with the gift card account number, so that it may be retrieved when the gift card is used to make a purchase or redemption.
This is illustrated in
Programmed processes for carrying out one embodiment of the invention are illustrated in
Once the card has been purchased, it is activated by the clerk swiping the card through the magnetic stripe reader/encoder 112 in order to read (step 330) the card ID or gift account number encoded or stored on the magnetic stripe (
In one embodiment illustrated in
The reader/encoder 112 then writes the fraud code into the appropriate field on the magnetic stripe of the purchased gift card 114 (step 352). If using a conventional magnetic stripe writer/encoder device, this can be done by the clerk again swiping the card through the reader/encoder 112 (the same device used for reading the account number at step 330), when prompted at a display on the POS terminal. In some embodiments, the POS terminal could have two separate devices (one for reading at step 330 and one for writing at step 352). In yet other embodiments, the reader/encoder could be integrated with the POS terminal 110, in order to read (step 330) and write (step 352) as programmed into the POS terminal, for example, using a motorized drive after the card has been inserted into a card slot to automatically move the card past read and write heads at the appropriate points in time during the process.
After the fraud code has been written onto the magnetic stripe, the activated card is provided back to the customer, ready for use (step 360).
In
As should be appreciated, the steps in the processes seen in
As should be appreciated, other embodiments are possible. For example, rather than storing the fraud code on a magnetic stripe, the fraud code could be stored in the memory of a smart card (i.e., a card having a processing/memory chip) or could be stored in memory associated with an RFID (radio frequency identification) device embedded on a card.
As another example, while the embodiments described above involve storing the fraud code at the gift card system 140, the fraud code could be generated at the POS terminal and/or matched at the POS terminal (using a fraud code generating/checking algorithm embedded or stored at the POS terminal). Further, while a fraud code unique to each gift card has been described, a less secure but perhaps less costly approach could involve placing the same fraud code on all cards at the merchant location upon activation.
Thus, while a detailed description of presently preferred embodiments of the invention has been given above, various other alternatives, modifications, and equivalents will be apparent to those skilled in the art without varying from the spirit of the invention. Therefore, the above description should not be taken as limiting the scope of the invention, which is defined by the appended claims.
