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United States Patent |
5,351,994
|
Pollin
|
October 4, 1994
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Automated payment system and method
Abstract
A system and method of collecting payments uses an automated system to
generate a draft, payable to the creditor and drawn on the payor's
checking account, pursuant to the payor's authorization. The draft is then
executed by the debt collector as authorized signatory for the payor, and
deposited into the payee's account to complete payment. The automated
system has a simple input screen which receives the necessary information
for generation of the draft, which may be read to the system operator over
the telephone by the authorizing payor. The system verifies the bank and
account information by comparing the input information to records in a
database associated with the system. Optionally, the system may also
generate an inquiry to the bank to determine the availability of funds in
the payor's account. When verification is complete, the system generates a
paper bank draft payable to the payor, using MICR ink so that the draft
can be processed in the banking system like an ordinary check. The
signature block of the draft is made for the collection agent "as
authorized signatory for" the payor.
Inventors:
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Pollin; Robert E. (19107 Grotto La., Germantown, MD 20874)
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Appl. No.:
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959930 |
Filed:
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October 15, 1992 |
Intern'l Class: |
G06F 015/30 |
Field of Search: |
283/67,57,58,117
364/401,400,406,408
|
References Cited
U.S. Patent Documents
Re32985 | Jul., 1989 | Nagata et al. | 364/408.
|
4321672 | Mar., 1982 | Braun et al.
| |
4381705 | May., 1983 | Roes et al.
| |
4385285 | May., 1983 | Horst et al.
| |
4494127 | Jan., 1985 | King.
| |
4630201 | Dec., 1986 | White.
| |
4758714 | Jul., 1988 | Carlson et al.
| |
4810866 | Mar., 1989 | Lord, Jr.
| |
4823264 | Apr., 1989 | Deming.
| |
4948174 | Aug., 1990 | Thomson et al.
| |
4960981 | Oct., 1990 | Benton et al.
| |
4974878 | Dec., 1990 | Josephson.
| |
5051900 | Sep., 1991 | Ito et al. | 364/408.
|
5053067 | Oct., 1991 | Carlson et al.
| |
5053607 | Oct., 1991 | Carlson et al.
| |
5111395 | May., 1992 | Smith et al. | 364/408.
|
5117355 | May., 1992 | McCarthy | 364/408.
|
5121945 | Jun., 1992 | Thomson et al.
| |
5126936 | Jun., 1992 | Chanpion et al. | 364/408.
|
5237159 | Aug., 1993 | Stephens et al. | 364/408.
|
5265007 | Nov., 1993 | Barnherd et al. | 364/408.
|
Other References
Letter of Jul. 27, 1993 from Jones, Tullar & Cooper, PC Regarding Pending
Patent Application of Robert Pollin.
Westcorp Software Systems, Inc. MICR PRO Series Brochure.
Acuprint Letter of Reseller.
Direct Check, Inc. Brochure.
The Nilson Report, Month of Jun., 1993, Issue 550.
Collection Software Brochure.
Freedom, from Telecom Support Systems, brochure.
International Banking Technology, brochure.
Article entitled "Germantown Firm Charges Ahead with Automatic Payment
Program", Germantown Gazette.
Checks By Phone materials.
Fidelity Checks Incorporated, Letter to Prospective Client.
Jul. 11, 1991 Letter to Byrd & Forrest Collection Agency, from Robert E.
Pollin.
Jul. 30, 1991 Letter to Doctors Credit Service Inc., from Robert E. Pollin.
Auto-Pay, Schedule of Fees for Collection Agencies.
Sample Check.
Copy of an Agreement.
Copy of an Auto Pay Brochure.
|
Primary Examiner: Bell; Paul A.
Attorney, Agent or Firm: Sixbey Friedman Leedom & Ferguson
Claims
I claim:
1. An automated apparatus for generating a plurality of authorized drafts
on financial accounts belonging to a plurality of payors, the drafts
payable to one of a fixed set of one or more payees, comprising:
input means for performing an electronic information input process wherein
a system operator enters information specifying a new payor previously
unknown to the system and a draft to be generated on an account of that
payor, said information including a financial institution identification
number, payor account identifier, and an amount to be drafted from said
payor's account;
an institutional database comprising financial institution identification
information;
institution verification means for receiving said financial institution
identification number and comparing said financial institution
identification number to entries in said institutional database, wherein
when said financial institution is found in the institutional database,
the institution verification means retrieves identifying information about
the institution and verifies the accuracy of said financial institution
identification number, and wherein when said financial institution is not
found in the institutional database, an error indication is generated;
processing means connected to said input means for receiving said input
information and processing said information to format a draft on said
financial account payable to said payee, said draft format including
identification of said financial account, identification of said financial
institution holding said financial account, and an instruction to pay said
amount to said payee including particular identification of said payee,
and further including a signatory block for an authorizing signature other
than said payor's signature; and
output means for transferring said draft formats to an external magnetic
printing means connectable to said processing means for generating a paper
copy of said drafts using magnetically encoded ink and printing fonts
compatible with clearing house check processing equipment.
2. The apparatus of claim 1 wherein said external magnetic printing means
is a laser printer using an MICR toner cartridge.
3. The apparatus of claim 1 wherein said input means comprises keying means
for receiving a manual input of information into at least one data entry
screen as part of said electronic information input process.
4. The apparatus of claim 3 wherein said institution verification means
operates to perform said comparison of a portion of said input information
from said input means to said financial institution identification number
during said manual input and provides immediately thereafter an indication
to the operator if said financial institution identification number does
not correctly identify a financial institution for which information is
present in said database.
5. The apparatus of claim 1 further comprising account identifier
verification means for checking said payor account identifier according to
a predetermined algorithm to determine whether said account identifier can
be a valid account identifier for said financial institution, and
thereafter provides an output indication if such processing determines
that said account identifier may be invalid.
6. The apparatus of claim 5 wherein said institutional database includes
account identifier checking algorithms associated with financial
institutions, and said account identifier verification means further
comprises means for retrieving an account identifier checking algorithm
from said institutional database for the payor's financial institution,
whereby said account identifier checking algorithm is used by said account
identifier verification means to determine whether said account identifier
can be a valid account identifier for said financial institution.
7. The apparatus of claim 5 wherein said account identifier verification
means checks said account identifier during a manual key entry step of
said information input process to determine whether said account
identifier can be a valid account number, and thereafter immediately
provides an indication to said operator if such processing determines that
said account number is facially invalid.
8. The apparatus of claim 1 further comprising a database of high-risk
postal zone codes which have been empirically associated with an elevated
risk of payment fraud, and zone warning means for comparing said postal
address of said payor with said postal zone code database and providing an
output indication when said payor's postal address is one of said
high-risk postal zone codes, whereby additional steps may be taken to
verify the ability to process said draft.
9. The apparatus of claim 8 wherein said output indication is provided to
the operator during a manual keying step of said information input
process.
10. The apparatus of claim 1 further comprising scheduling means connected
to said input means and said processing means for receiving information
defining a postdated draft to be generated by the system, said draft to
have a date not prior to a specified future date.
11. The apparatus of claim 10 wherein said scheduling means includes
storage means for storing said postdated draft information and for
recalling said information and generating said draft on or after said
specified date.
12. The apparatus of claim 11 further comprising notification means
associated with said scheduling means for automatically generating a
written notice to said payor indicating that said authorized future draft
will be generated and deposited as a draft against said payor's account.
13. The apparatus of claim 10 wherein said scheduling means schedules the
generation of said drafts at regular periodic intervals until receiving a
new instruction to cease scheduling said drafts at said regular intervals.
14. The apparatus of claim 10 wherein said scheduling means schedules
generation of said drafts on dates specified by said payor and having
varying amounts specified by said payor to complete a payment of said
debt.
15. The apparatus of claim 1 wherein a plurality of said input means are
provided at a plurality of remote locations and connected to transmit said
input information to said processing means which is installed at a central
location to produce drafts for said plurality of input means.
16. The apparatus of claim 15 wherein said institution verification means
are provided at the remote locations.
17. The apparatus of claim 16 wherein said input means comprises keying
means for receiving a manual input of information into at least one data
entry screen as, part of said electronic information input process and
said institutional verification means includes means for obtaining the
financial institution identification number in a manual key entry step and
generating an indication to the operator during said manual key entry step
if said input information does not correctly identify a financial
institution for which information is present in said database.
18. The apparatus of claim 1 wherein said system is implemented on a
computer using software which incorporates security measures for
preventing fraudulent draft production, said security measures comprising
the coded imbedding of said payee identification information in said
software so that payee information appearing on said drafts cannot be
readily modified by a person gaining unauthorized access to said software.
19. The apparatus of claim 1 further comprising automatic funds
verification means for electronically transmitting a message seeking
information on the availability of funds to cover a draft generated by
said apparatus.
20. The apparatus of claim 19 wherein said institutional database comprises
fax telephone numbers of the financial institutions and wherein the
automatic funds verification means comprises a fax modem and means for
automatically and electronically formatting and transmitting, to the
payor's financial institution at a fax telephone number retrieved from
said institutional database, a fax message requesting notification if
funds are not available for a draft.
21. The apparatus of claim 19 wherein said automatic funds verification
means comprises means for automatically contacting a third party check
guarantee service and electronically submitting a description of a draft
to be processed and an order for payment guarantee service relating to the
draft.
22. A standalone personal computer apparatus for receiving input
information and automatically printing authorized drafts on a plurality of
financial accounts belonging to a plurality of payors, in payment of debts
to one of a fixed set of one or more payees., comprising a personal
computer, with a display screen, keyboard, and printer that prints with
magnetic ink operably connected to said personal computer; said personal
computer having an operating program recorded therein providing a set of
instructions for sequential execution by the computer, such that when
executing said instructions the computer displays an input screen on the
display screen and then acquires, through input to the keyboard by an
operator, input information comprising: an account number identifying an
account at a financial institution, an identification number identifying
the financial institution, and an amount to be paid to said payee; said
operating program subsequently operating to format a draft on said
financial account particularly,formatted to be submitted for payment
without an actual signature of the payor and without a facsimile of an
actual signature of the payor, said draft payable to the payee and
formatted substantially like a personal check, with an order for payment,
and with said account number and said financial institution identification
number located on a bottom portion of said draft in a machine readable
font according to automated check clearing house conventions, and with a
signatory block for an authorizing signature other than said payor's
signature; wherein said draft format is transferred to said printer by the
operating program to generate a paper copy of said draft for deposit to
the account of the payee.
23. The apparatus of claim 22 wherein the operating program recorded in the
computer includes a database of financial institution identification
information and further includes instructions for execution after the
receipt of the financial institution identifying number which cause the
computer to search said database for a match of the identifying number,
and if such match is found, display the name of the financial institution,
and if such match is not found, to display a message indicating a possible
incorrect identifying number.
24. An automated apparatus for generating a plurality of authorized drafts
on financial accounts belonging to a plurality of payors, the drafts
payable to one of a fixed set of one or more payees, comprising:
input means for performing a manual input process wherein a system operator
enters information specifying a new payor previously unknown to the
apparatus and a draft to be generated on an account of that payor, said
information including a financial institution identification number, payor
account identifier, and an amount to be drafted from said payor's account;
an institutional database of financial institution information;
validity verification means for retrieving a record from said institutional
database corresponding to the payor's financial institution and checking
said account identifier according to an algorithm established for the
payor's financial institution to determine whether said account identifier
can be a valid account identifier, and providing an output indication
during the manual input process if such checking establishes that said
account identifier may be invalid;
processing means connected to said input means for receiving said input
information and processing said information to format drafts on said
financial account payable to said payee, said draft format including
identification of said financial account, identification of said financial
institution holding said financial account, and an instruction to pay said
amount to said payee including particular identification of said payee,
and further including a signatory block for an authorizing signature other
than said payor's signature;
output means for transferring said draft formats to an external magnetic
printing means connectable to said processing means for generating a paper
copy of said drafts using magnetically encoded ink and printing fonts
compatible with clearing house check processing equipment.
25. An automated apparatus for generating a plurality of authorized drafts
on financial accounts belonging to a plurality of payors, the drafts
payable to one of a fixed set of one or more payees, comprising:
input means for performing a manual input process wherein a system operator
enters information specifying a new payor previously unknown to the
apparatus and a draft to be generated on an account of that payor, said
information including a financial institution identification number, payor
account identifier, postal address of the payor, and an amount to be
drafted from said payor's account;
a postal zone code database of high-risk postal zone codes which have been
empirically associated with an elevated risk of payment fraud;
zip code verification means connected to said input means and said postal
zone code database for comparing said postal address of said payor with
entries in said postal zone code database and providing an output
indication during said manual input process when said payor's postal
address has one of said high-risk postal zone codes, whereby additional
steps may be taken to verify the ability to process said draft;
processing means connected to said input means for receiving said input
information and processing said information to format drafts on said
financial account payable to said payee, said draft format including
identification of said financial account, identification of said financial
institution holding said financial account, said payor's address, and an
instruction to pay said amount to said payee including particular
identification of said payee, and further including a signatory block for
an authorizing signature other than said payor's signature;
output means for transferring said draft formats to an external magnetic
printing means connectable to said processing means for generating a paper
copy of said drafts using magnetically encoded ink and printing fonts
compatible with clearing house check processing equipment.
26. An automated apparatus for generating a plurality of authorized drafts
on financial accounts belonging to a plurality of payors, the drafts
payable to one of a fixed set of one or more payees, comprising:
input means for performing a manual input process wherein a system operator
enters information specifying a new payor previously unknown to the
apparatus and a draft to be generated on an account of that payor, said
information including a financial institution identification number, payor
account identifier, and an amount to be drafted from said payor's account;
processing means connected to said input means for receiving said input
information and processing said information to format drafts on said
financial account payable to said payee, said draft format including
identification of said financial account, identification of said financial
institution holding said financial account, and an instruction to pay said
amount to said payee including particular identification of said payee,
and further including a signatory block for an authorizing signature other
than said payor's signature;
output means for transferring said draft formats to an external magnetic
printing means connectable to said processing means for generating a paper
copy of said drafts using magnetically encoded ink and printing fonts
compatible with clearing house check processing equipment;
wherein said apparatus is implemented on a computer using software which
incorporates security measures for preventing fraudulent draft production,
said security measures comprising the coded imbedding of said
identification of said payee in said software whereby that payee
information appearing on said drafts cannot be readily modified by a
person gaining unauthorized access to said software.
Description
A portion of this disclosure contains material in which copyright is
claimed by the applicant. The applicant has no objection to the copying of
this material in the course of making copies of the application file or
any patents that may issue on the application, but all other rights
whatsoever in the copyrighted material are reserved.
MICROFICHE APPENDIX
The specification of this patent includes a microfiche software appendix in
the form of two fiches with a total of 178 frames.
1. Field of the Invention
The present invention relates to systems and methods for collecting
payments using an automated draft printing system operated by a payment
collector.
2. Background of the Invention
The effective operation of the modern economy depends on the ready
availability of payment mechanisms by which funds can be transferred
between parties. A number of mechanisms have been available for use both
at the point of sale and for collection of debts relating to earlier
sales. At the point of sale, the most popular payment mechanisms in recent
times have been cash, personal checks, and bank-issued credit cards,
including MasterCard (.TM.), VISA (.TM.), Discover (.TM.), and American
Express (.TM.). Other methods of payment include store-issued credit
accounts, bank account debit cards, Cash-on-Delivery (COD), and contracted
payment plans in which the customer agrees to pay for goods or services
according to a predetermined schedule.
Cash in advance is the only one of these methods that is not subject to a
later non-payment or revocation which would prevent the merchant from
collecting the amount due. Personal checks may be returned for
insufficient funds and are subject to stop payment orders by the maker.
Credit card sales are subject to federal laws which permit non-payment or
at least a considerable delay of payment if the customer indicates
dissatisfaction with the quality of goods or services rendered. The
issuers of credit cards, credit accounts, and payment plans run the risk
that the credit bill, even if not disputed, will not be paid according to
the credit agreement. Debit card sales are subject to federal electronic
funds transfer regulations which make it possible under some circumstances
to later disallow a transaction. Cash-on-delivery transactions may be
rejected by the purchaser at the time of delivery, leaving the seller to
absorb the cost of the failed delivery. While some refusals of payment are
the result of a legitimate dispute between the buyer and seller, many of
these cases are a breach of the customer's duty to pay. Losses from bad
debts must be absorbed by the merchant and passed along to future
customers. Thus, most merchants might prefer to collect from their
customers in cash.
However, the risk of loss inherent in carrying large amounts of cash
discourages many people from carrying cash and using it to pay for more
expensive goods and services. Also, when goods or services are to be
delivered at a later time, customers do not wish to pay in advance and
thereby assume the risk of default or bankruptcy of the seller before the
goods or services are delivered. Finally, in many cases the customer does
not have the funds to make the purchase, and needs to finance the purchase
by borrowing. For these reasons and others, these alternative payment
mechanisms have collectively become much more popular than paying cash in
advance and merchants necessarily offer alternative payment methods.
Various systems have been developed to reduce the risk to merchants in
accepting checks or other non-cash instruments. For example, U.S. Pat. No.
5,053,607 to Carlson et al. shows a point-of-sale system for verifying
availability of funds so the merchant can determine whether to accept a
check. Of course, such systems do not guard against a subsequent stop
payment order being issued by the customer.
The popularity of these "promises to pay" has also resulted in the growth
of an entire collection industry devoted to finally collecting debts
represented by checks, credit accounts, and payment agreements in cases
where the debts have not been timely paid.
When a debt goes unpaid, a merchant or credit issuer may hire a collection
agency to seek recovery of the debt. The collection agency generally
contacts the debtor repeatedly by phone and/or mail in an attempt to
obtain payment. Generally, the collection agencies try to persuade the
debtor to mail a check to the collection agency in payment of the debt. Of
course, debtors often put off payment with the oft-used line "the check is
in the mail." Even if a check is received, it is subject to dishonor as
noted above. Collection agencies may also accept credit cards, but many
debtors do not have credit cards or do not have sufficient credit to pay
the amount due using a credit card. Also, a wire service is offered by
Western Union (.TM.), for example, which allows persons to pay by cash or
check at a remote location and have the funds transferred to the
collection agency, for a substantial fee. This system requires that the
debtor physically go to a wire transfer office to pay, and is less
desirable and effective for that reason.
Because of the substantial manual effort involved in repeatedly contacting
a debtor, collection agencies are often paid in the form of a substantial
percentage of the amounts collected. Again, this represents a loss to the
merchant which must be recovered through increased prices to future
customers.
As noted above, one particular type of debt that often causes collection
problems is an agreement to make scheduled payments. A variety of goods
and services, such as automobiles, homes, major dry goods, and health club
memberships, are often purchased on payment plans. Because of the repeated
nature of the payments, it is possible that even the most diligent payor
may, at some point, forget to mail a payment or send it late. Also, while
the mail system in developed countries such as the United States achieves
a very high delivery rate, it is statistically inevitable that some mailed
payments will not be delivered.
One solution to the problems of reliably collecting repeated payments is a
pre-authorized electronic debit. Many large and well-connected creditors,
such as banks and the finance arms of automobile manufacturers, generate
monthly tapes of authorized payments which are then processed
electronically within the banking system. Funds are withdrawn from the
checking account of the consumer and transferred directly to the creditor.
This service has recently been made available to smaller accounts with a
substantial per-transaction charge. However, this electronic banking
system is primarily adapted for processing pre-authorized transfers on
particular predetermined dates, and deposits therefore cannot be processed
entirely at the convenience of the parties. A connection with a bank is
needed, which either involves obtaining and maintaining a direct
connection or the use of a transaction processing company. Also, such
electronic funds transfers cannot be authorized by telephone; a written
authorization is legally required, so that immediate authorized collection
of a debt cannot be accomplished by this method.
Other automated payment systems have been developed, but do not achieve the
advantages of the present invention. U.S. Pat. No. 5,121,945 to Thomson et
al. shows a system for generating regular checks, such as for the payment
of utility bills, on customer accounts using a laser printer with a
magnetic toner cartridge. Using stored account information, an authorized
check to the payee is generated by the central system and transmitted to
the payor for approval, signing, and return. While this system may be
advantageous for the limited purpose disclosed, it does not provide a
system in which transfers are authorized by telephone and executed without
mail delays.
U.S. Pat. No. 4,823,264 to Deming shows a system in which a customer can
electronically pay bills using a computer. The customer's computer
transmits an order to pay a bill to a central location, and a paper draft
is generated for transmission to the payee. Funds availability may be
verified before generation of the draft. This system requires that the
debtor have particular computer equipment, and would therefore be
ineffective in generalized debt collection situations.
U.S. Pat. No. 4,960,981 to Benton et al. discloses a method and system for
transferring funds in which the customer's signed order to pay is
transmitted to the bank by fax. The bank's fax receiver is equipped with
character recognition equipment which takes the necessary information from
the order, after which the system verifies funds availability and makes
the payment requested if the funds are available. This system can only be
used in cases where the bank involved has the required special equipment
and the customer is present to sign the payment instructions.
Therefore, the inventor believes there is a need for an improved system and
method for collection of debts which can be used for immediately debiting
a debtor's bank account when the debtor authorizes this collection method
by telephone.
SUMMARY OF THE INVENTION
Therefore, it is a general object of the present invention to provide a
method for collecting funds from a customer's checking account when
authorized, without requiring that an executed check be mailed to the
payee.
It is a further general object of the present invention to provide a system
which facilitates authorized generation of a payment order for transfer of
funds from a customer's checking account.
Another object of the present invention is to provide a system for
generating authorized drafts on a plurality of financial accounts
belonging to a plurality of payors.
A further object of the present invention is to provide a system for
generated authorized drafts which receives input information sufficient to
generate a draft, and which processes the information to produce a draft
to be executed by an authorized agent for the payor.
Another object of the present invention is to provide a stand-alone system
for producing drafts on a plurality of accounts, wherein the system
includes a laser printer using an MICR toner cartridge.
A further object of the present invention is to provide system for
producing drafts on a plurality of accounts belonging to a plurality of
persons which receives input information and verifies the information to
prevent generation of nonnegotiable drafts.
Yet another object of the present invention is to provide a system for
automatically producing drafts which verifies input bank routing code
information by comparing the information to a database of bank
identification information.
A further object of the present invention is to provide a system for
automatically producing drafts which verifies the probable validity of an
account number identifying a financial account.
Another object of the present invention is to provide a draft producing
payment system that identifies high risk drafts and provides an increased
level of verification for such drafts.
A further object of the present invention is to provide a scheduling system
for automatically scheduling the future production of drafts, including a
predetermined limited sequence of drafts or a series of periodic drafts.
Still another object of the present invention is to provide a system which
automatically generates authorized drafts and which further automatically
generates a verification notice to the person authorizing the drafts.
Another object of the present invention is to provide a geographically
dispersed system for processing drafts in which a plurality of data
collection stations are connected to a central draft production system
which generates the drafts.
Another object of the present invention is to provide a draft production
system which has security measures associated with it to reduce the
likelihood of production of unauthorized drafts.
A more particular object of the present invention is to provide a draft
production system which is designed to produce drafts payable only to a
predetermined party, such that the name of the party cannot be readily
changed by a user of the system.
Another object of the present invention is to provide a process for
receiving payments in which an automated draft production system is
provided to produce authorized drafts on the account of a payor,
executable by a person other than the payor.
It is also an object of the present invention to provide a process for
collecting a payment in which a payor authorizes withdrawal of funds from
the payor's checking account, for example by telephone, a draft is
generated using an automated draft production system, negotiability of the
draft is verified, the draft is executed on behalf of the payor, and
deposited to the account of the payment collector.
Still another object of the present invention is to provide a process for
collecting payments in which a payor authorizes withdrawal of funds from
the payor's checking account, for example by telephone, a draft is
generated using an automated draft production system, the draft is
executed on behalf of the payor, and deposited to the account of the
payment collector, in which the authorizations are received at a plurality
of geographically dispersed locations and transmitted to a central service
location for generation of the drafts.
Other objects of the present invention will be apparent to those skilled in
the art upon review of the specification, drawings, and claims of the
present invention.
These objects and others are achieved according to the present invention by
providing a system and method of collecting debts in which an automated
processing system generates a draft, payable to the creditor and drawn on
the debtor's checking account, pursuant to the debtor's authorization. The
draft is then executed by the debt collector as authorized signatory for
the debtor, and deposited into the creditor's account. The automated
system used to generate the drafts in the preferred embodiment has a
simple input screen which receives the necessary information for
generation of the draft, which in the preferred scenario is read to the
system operator over the telephone by the debtor who has authorized the
payment. The system then immediately verifies the bank and account
information by comparing the input information to the data in a bank
information database associated with the system. This verification process
ensures that any errors in transmission of the account identification
information can be rectified during the conversation with the debtor.
Optionally, after verifying the account information, the system may
generate an inquiry to the bank to determine the availability of funds in
the debtor's account. When all verification is complete, the system
generates a paper bank draft payable to the creditor, using MICR ink so
that the draft can be processed in the banking system like an ordinary
check. The signature block of the draft is made for the collection agent
"as authorized signatory for" the debtor. In this manner, it is possible
to obtain authorization for payment of a debt in a telephone conversation
with the debtor and to immediately deposit the debtor's authorized draft
to begin the payment process, without depending on the debtor and the mail
system to deliver a signed payment order to the creditor's collection
agent.
This system and method is particularly advantageous in automating the
processing of debts by collection agencies, and as a payment alternative
to credit cards and COD deliveries for goods and services ordered by
telephone. Finally, this system and method can be used advantageously for
regular payment generation by businesses whose pre-authorized payments are
not regular enough to justify regular mass electronic funds transfers.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is a diagram of the hardware used in a preferred embodiment of the
present invention to generate drafts on a customer bank account;
FIG. 2 is a flow chart showing a preferred embodiment of the automated
collection method according to the present invention;
FIG. 3 is a representation of the main menu display in the preferred
embodiment of the invention;
FIG. 4 is a representation of the main data entry screen according to the
preferred embodiment of the invention;
FIG. 5 is a representation of the screen display when postdated draft
instructions are entered in the system;
FIG. 6 is a representation of the screen display showing an error message
indicating an invalid bank identification number;
FIG. 7 is a diagram of the screen display showing a zip code error message;
FIG. 8 is a diagram of an additional preferred embodiment of the present
invention in which computer systems are provided at a plurality of
locations to collect and verify draft data and the data is then
transmitted to a central service bureau for production of the drafts;
FIG. 9 is a block schematic diagram of the software structure in a
preferred embodiment of the present invention; and
FIG. 10 is a sample draft generated according to a preferred embodiment of
the present invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
In general, as described above, the present invention provides a system and
method of collecting payments in which an automated system generates a
draft, payable to the payee and drawn on the payor's checking account,
pursuant to the payor's authorization. The draft is then executed by the
payee's collector as authorized signatory for the payor, and deposited
into the payee's account. The automated system used to generate the drafts
in the preferred embodiment has a simple input screen which receives the
necessary information for generation of the draft, which in a typical
scenario will be read to the system operator over the telephone by the
payor who is authorizing the transfer. The system then immediately
verifies the bank and account information by comparing the input
information to the data in a bank information database associated with the
system. This verification process ensures that any errors in transmission
of the account identification information can be rectified during the
conversation with the payor. Optionally, after verifying the account
information, the system may generate an inquiry to the bank to determine
the availability of funds in the payor's account. When all verification is
complete, the system generates a paper bank draft payable to the creditor,
using MICR ink so that the draft can be processed in the banking system
like an ordinary check. The signature block of the draft is made for the
collection agent "as authorized signatory for" the payor. In this manner,
it is possible to obtain authorization for payment of a debt in a
telephone conversation with the payor and to immediately deposit the
payor's authorized draft to begin the payment process, without depending
on the payor and the mail system to deliver a signed payment order to the
payee's collection agent.
Referring first to FIG. 1, the present invention is implemented, in a first
preferred embodiment, using a localized computer system 100 comprising a
personal computer 102 and a display screen 104, keyboard 106, and printer
108 connected to personal computer 102. Printer 108 is preferably a laser
page printer such as any of the printers sold under the trademark Laserjet
(.TM.) by the Hewlett-Packard company. Printer 108 operates using a toner
cartridge 110 installed in printer 108, and the toner cartridge is of the
type which prints with magnetically charged ink which can be read by
Magnetic Ink Character Recognition (MICR) equipment used by the banking
system's automated check clearing centers. These MICR toner cartridges can
be obtained from a number of sources, for example LaserScript division of
Matrix Technology, Inc., 7129 Banjo Ct., Columbia, Md. 21045; or MICR Tech
Group, Inc., P.O. Box 152, Brownstown, Ind. 47220. The cartridge used
should be one selected for compatibility with the brand and model of
printer 108 being used. Personal computer 102 may be an IBM (.TM.)
compatible personal computer incorporating an INTEL 80X86 (.TM.)
microprocessor and running the Microsoft MS-DOS (.TM.) operating system or
another of the various operating systems adapted to work on this class of
computer. Of course, those skilled in the art will appreciate that the
system can also be implemented on a variety of personal computers,
minicomputers, or mainframe computers, using a variety of printers, and
the invention is not limited to the particular hardware disclosed in this
preferred embodiment.
The system 100 can be operated with a single input workstation as shown or
multiple input workstations can be provided. If multiple input
workstations are used, the software in the system will be designed for
multiuser access. For example, record locking protocols may be
implemented.
The computer 102 is optionally provided with a fax modem 112 which can be
installed internally in computer 102 and is connected to an outgoing
telephone line (not shown). Fax modem 112 may be a JT FAX Board made by
Hayes Microcomputer Products, Inc. of Atlanta, Ga. Fax modem 112 permits
software operating in computer 102 to electronically generate fax images
and to subsequently dial a remote fax machine and transmit the image to
the remote machine. As will be explained in more detail later, this fax
modem may be used in the preferred embodiment of the present invention to
generate and deliver a letter of inquiry to the debtor's bank to determine
whether the debtor's account is in good standing and has sufficient funds
to make payment on an authorized draft.
The system disclosed herein can be advantageously used as part of a debt
collection process in which the debtor is contacted by a collection agent
over the telephone and, if willing to pay, is asked to authorize
generation and presentation of a draft on the debtor's checking account.
The debtor's name, address, telephone number, description of the debt, and
the amount are typically already known to a collection agent. In the case
of use of this system for mail or telephone orders of goods and services,
this information will be obtained by the person receiving the order and
entered in the system. The remaining input information describing the
desired draft transaction, particularly the ABA number, account number,
and next check number, is obtained from the debtor, usually by having the
debtor read off the numbers on the bottom of one of debtor's checks. The
next check number in debtor's check sequence is obtained and the debtor is
instructed to destroy the existing check bearing that number. After
processing by the check clearing house system, the draft generated will
appear in the debtor's bank account statements as a numbered check and the
paid draft will be returned to debtor with his or her other checks
depending on the policy of debtor's financial institution.
For convenience, the person operating the system will generally be referred
to herein as a "collection agent" and the payor will be referred to as the
"debtor." However, it should be recognized that the present system and
method can be used not only to collect preexisting debts, but as a payment
mechanism for telephone or other sales. In this case, the person
authorizing the draft will be a customer and the system operator will be
an order processor. Also, for convenience the financial institution
holding the debtor's account will generally be referred to as a bank, but
it should be understood that this financial institution may be a savings
and loan, credit union, brokerage firm, investment firm, or money market
account issuer, or any other institution public or private upon which the
debtor may lawfully issue an instruction to pay funds to a designated
party.
The software program operating on computer 102 is preferably menu driven.
FIG. 3 shows a preferred main menu for the software program. As can be
seen by reference to FIG. 3, the functions of the software accessible from
the main menu preferably include entering new draft production (check)
information; entering information for production of a series of drafts on
the same account; editing drafts currently scheduled for production and
deposit; editing drafts scheduled for future production and deposit;
viewing or deleting the draft information recorded in the system; viewing
records (archival information) of past drafts produced by the system;
printing drafts; performing system utility functions; and ending execution
of the program.
The system utilities selection on the main menu preferably produces display
of a utility menu which provides a number of system management functions.
For example, these functions preferably include re-indexing of databases
associated with the system, data backup functions, security functions such
as changing authorized passwords for system operation, updates to
databases such as the zip code database and the ABA database, system
configuration functions such as selecting the port to which the printer is
connected, the type of printer, etc.; setup of the facsimile verification
functions, purging stored records such as records of archived checks, and
other desired system management functions.
The software preferably operates generally according to the flow chart of
FIG. 2. As shown in FIG. 2, in block 202 the necessary information to
specify the draft is entered in the computer 102 as part of an information
entry process, preferably during the course of the above-described
telephone conversation with the debtor. Specifically, in block 202
transaction information is input into the computer 102 (shown in FIG. 1).
This transaction information is preferably input using the keyboard 106
(shown in FIG. 1). In performing the step of block 202, screen 104 (shown
in FIG. 1) will preferably display a data entry screen such as that shown
in FIG. 4. As can be seen in FIG. 4, the transaction information
preferably includes the name and address of the debtor, the next check
number in sequence for the debtor's account, the date of the draft, the
amount of the draft, a memo entry describing the debt, an American Banking
Association (ABA) bank identification number specifying the bank or other
financial institution holding the debtor's checking account, and the
number of the debtor's checking account.
The information entry process in block 202 may also include the scheduling
of future payments for which drafts are to be generated by the system.
FIG. 5 shows a screen display which permits entering of future payments to
be generated. Preferably, there are several modes for entry of future
payments. In a first mode, payments of the same amount are scheduled
regularly at predetermined intervals in the future, and generation of
drafts will continue at the defined intervals until the system is
instructed to discontinue the payments. In a second mode, one or more
payments of varying amounts may be scheduled for defined dates in the
future. These features are particularly useful in several situations which
may be encountered by the system operator.
As a first example, when contacted regarding overdue debts, debtors
frequently indicate a desire to pay at a future date when funds are
expected to be available. For example, the debtor may offer to pay $50 of
a $120 debt on the next Friday when the debtor will receive a paycheck,
and may agree to pay the remaining $70 due two weeks later, upon receipt
of his or her next paycheck. Since the system permits the scheduling of a
plurality of future drafts at any desired dates, and with varying amounts,
the system readily accommodates such debtor-creditor arrangements.
As a second example, the system can be used as a payment system for a sale
which requires periodic payments, e.g. a health club membership for which
monthly dues are paid. In this case, the purchaser may agree that a draft
for a defined amount, for example $19.95 a month, will be automatically
submitted on an agreed day each month in payment of dues. The system will
be programmed to automatically generate this draft each month until
different instructions are received. For example, if the customer wishes
to discontinue the membership, the system operator would instruct the
system to cease regular production of drafts on the customer's account.
As a third example, the system can be used to generate regular periodic
payments of different amounts. For example, a customer of a service using
this system might authorize automatic payment of monthly utility bills by
the service. The payments in this case would be periodic, but the system
would require entry of a varying amount for each draft to be generated.
For such uses, the customer might advantageously provide a general
authorization to generate periodic drafts in the amount owed each period,
and this information might be automatically transferred from a billing
records system to the system of the present invention to initiate
generation of the drafts in the proper amount. It may frequently be
desirable to interface the system of the present invention with billing,
accounting, or other programs used by the payee. For example, such an
interface can be accomplished by transferring batch processing or
information files between the present system and the billing or accounting
programs by writing the files to a mass storage device or through an
interface program such as Microsoft Windows (.TM.).
The information entered to define future (postdated) drafts will be stored
for future use as described further below with respect to block 212 of the
flow chart.
As the information is entered in block 202, or immediately after entry is
completed, the information given is preferably verified against
appropriate databases and checking algorithms associated with the computer
102, as shown in blocks 204, 206, and 208. In block 210, any warning
messages determined by the verification process will be displayed to the
operator. It should be noted that the display of these warning messages is
shown in a single flow chart block for convenience, and the verification
functions can be performed, and the warning messages displayed,
immediately after data entry has been entirely completed. However, it may
also be desirable to have each data verification function performed during
the information entry process, as the relevant data item is entered, and
to immediately display a warning message if the item just entered is
erroneous.
In conjunction with the software which performs the verification function,
the databases and algorithms provided are a verification means for
immediately checking the validity of the data entry.
As a first step in the verification process, the ABA number entered to
identify debtor's financial institution is validated by comparison with
the entries in a financial institution database having a record of each
authorized ABA number, as shown in block 204 of FIG. 2. This financial
institution database is preferably constructed from records which each
describe a financial institution, and include the financial institution's
ABA number, name, address, telephone number, and fax number. If the ABA
number is found in the database, the software program displays the
financial institution name and address on the screen of FIG. 4 so that the
collection agent can verify the correctness of this information with the
debtor. If no matching ABA number is found, a warning message will be
provided to the collection agent operating the system according to the
function of block 210 and as illustrated in FIG. 6. This message indicates
that the ABA number is believed to be invalid. Although the system
preferably provides a method for overriding this error detection and using
the suspect bank identification number, generally the collection agent
will ask the debtor to re-read the bank identification information on the
bottom of debtor's check so that a corrected financial institution
identification number can be entered.
In this way, the present invention provides particular advantages in the
context of a process for quickly generating one-time payment transactions.
This verification process provides an opportunity to verify the accuracy
of essential transaction processing information at a time when the debtor
is still on the line and can provide corrected information if necessary.
In this way, returned drafts and associated fees assessed by the
creditor's financial institution can be avoided. This verification process
can be achieved using a local computer system without any direct hookup to
electronic banking information networks.
Referring again to FIG. 2, a further verification step may be performed on
the account number as shown in block 206. Many financial institutions
limit the account numbers used to numbers which meet the requirements of a
particular predetermined algorithm, e.g. all account numbers may be
divisible by a predetermined number or the sum of the digits may have a
predetermined characteristic. If the financial institution database
associated with computer 102 is provided with information defining such
account number verification algorithms for the financial institution
involved, the validity of the account number can be verified and an
immediate warning issued to the collection agent if an invalid account
number is suspected.
Further verification functions may be performed upon operator entry of the
debtor's zip code as shown in block 208 of FIG. 2. In one embodiment, a
database associating all valid zip codes with their associated city and
state names may be associated with computer 102, and the entry of the zip
code may result either in the display of debtor's city and state for
verification with the debtor, or may result in an error message indicating
that the zip code appears to be incorrect, as shown in FIG. 7.
Referring again to FIG. 2, in another preferred embodiment, the zip code
database may include empirical or statistical information on the
prevalence of check fraud originating in that zip code. This information
will be particularly useful in cases where the present system is used as a
payment mechanism for mail or telephone orders. If the debtor's zip code
is one which has experienced a high proportion of check fraud or bad
checks, an indication can be generated to the system operator, and
additional verification procedures can be implemented. Additional
information could be requested from the debtor, or the collection agent
might take steps to insulate against nonpayment of the draft, such as
verifying funds availability directly with the debtor's financial
institution or obtaining a check guarantee from a firm specializing in
such transactions. To achieve more precision than can be obtained merely
from a zip code check, a database of overdrawn account numbers and names
and addresses of bad check passers may also be provided, and a match with
an entry in this database could similarly be used to produce a warning to
the collection agent to take protective action, such as one or more of the
techniques suggested above.
Following completion of the verification functions, as shown in block 210
in FIG. 2, the system will display any appropriate messages to the
operator indicating possible errors in data entry or in the information
received from the payor. In the flow chart, this function is shown in a
single block after the verification steps, but it may be even more
preferable to display appropriate messages immediately following each
verification step to provide feedback to the operator as soon as an
incorrect entry has occurred. The display of error indications could also
occur at a time after data entry, for example, as part of an exceptions
report for a large batch of drafts being printed.
In the next step, as shown in block 212, transaction information defining
the draft to be produced may be stored in the computer 102, preferably in
a mass storage device associated therewith. The information defining each
draft printed is preferably permanently archived for future reference in
case of any question or dispute.
As noted above, it is also possible to schedule future payments using the
system according to the present invention. For example, the system may be
programmed to generate postdated drafts or a series of regular periodic
drafts. These postdated drafts can be printed immediately and held for
deposit by the operator until their effective date, or data defining the
postdated drafts can be stored in the storage step of block 212 and the
program can operate to schedule production of postdated drafts and
activate the printer to print the drafts on the date the drafts are
desired.
Once data defining postdated drafts is stored, the drafts can be viewed and
edited in any desired manner, or even deleted, prior to their actual
generation, as noted previously in the description of the main menu
functions. For example, if a series of drafts has been scheduled and the
payor changes banks or account numbers, the corrected information for the
draft can be entered at a later date through the editing function before
the drafts are generated. As another example, an authorization of a series
of drafts can be deleted using the delete function on the main menu.
As part of the function of printing drafts and scheduling drafts in
advance, the software will preferably automatically generate a standard
form written notice letter to the payor listing the amount and date of the
drafts which will be presented for payment. The written notice may include
a form part including language authorizing the transaction and designed to
be signed and returned to the payment collector to provide a written
authorization for making a draft or drafts on the payor's account. This
notice can be printed on the printer 108 or, preferably on another printer
(not shown) associated with the system which is loaded with paper
appropriate for correspondence.
Referring again to FIG. 2, the system may automatically take action in
block 214 to verify the availability of funds in the payor's account. This
verification operation is particularly important in the case of one-time
transactions, for which the present system and method are particularly
applicable. The payor may be a person with a questionable credit record,
in cases where the system is used by a collection agency, or the payor may
be a new customer and have an indeterminate record in cases where the
system is used for telephone order taking, such as in response to
television advertising or mail order catalogs.
The funds verification process executed by the system may take any desired
form, but two forms in particular are preferred in the present invention.
In the first preferred embodiment, a fax letter is automatically generated
and transmitted to the payor's financial institution, identifying the
payor and the account number, indicating the amount of the transaction
authorized, and requesting that the financial institution immediately
contact the system operator (preferably at a toll-free number or by a
collect call) if sufficient funds are not available or the payor's account
is not open and in good standing. The fax letter may be based on a
standardized form letter, and the payor, account, amount, and bank
identification information are then inserted in the form letter
automatically by the program from the draft production data whenever this
fax verification feature is enabled by the operator or by programming of
the system. The bank's fax number may be obtained from the financial
institution database associated with the system, and the program uses the
fax modem 112 (shown in FIG. 1) to automatically transmit the fax letter
to the bank. Thus, the generation and transmission of this fax letter is
entirely electronic and automatic and does not require any intervention
from the operator. The timing of the transmission of the fax letter can
also be controlled by the operator through a screen entry or by the system
through predetermined criteria. For example, it may be desirable to store
a record of facsimiles to be transmitted and to then transmit these faxes
during evening, nighttime or weekend hours when lower telephone rates are
in effect.
In a second embodiment of the funds verification function of block 214, the
system may be selectively connected using fax modem 112 (shown in FIG. 1)
to one of the central clearing houses or databases capable of providing
on-line check authorization or check guarantees. In this embodiment, the
software of the present invention would automatically connect to the check
verification service and transmit appropriate draft information as part of
an inquiry to determine whether sufficient funds are available. The
software may also compare the payor and/or account information to a
"negative database" listing names and addresses, social security numbers,
account numbers, or other identifying information of persons who have
drawn bad checks. Any or all of these methods can be used. If insufficient
funds are available or the account does not exist in good standing, the
system may then automatically generate an indication to the operator.
These funds verification functions may be selectively enabled and disabled
by the operator based on predetermined criteria, or may be automatically
enabled and disabled by the system based on predetermined criteria, for
example the lack of payment history with the particular customer or the
use of a suspect zip code.
When a draft is to be produced, either because the system is operated in an
immediate production mode or because production of current "postdated"
drafts has been requested by the operator, the software operates to format
the drafts as shown in block 216 of FIG. 2. The formatting of the draft is
accomplished according to a predetermined draft design programmed into the
system. The system determines the locations for printing of data on the
draft, and the size and fonts to be used for each data item. A sample
draft is shown in FIG. 10 indicated by the reference number 1000. The
draft includes the payor's name and address 1002, the date and the payor's
sequential check number, payee designation 1004, financial institution
identification 1006, the amount 1008, a memo line 1010, automated clearing
house information 1012, and signature block 1014. The payee designation
1004 is preferably hard coded into the system and cannot readily be
changed. Similarly, the signature block 1014 is predetermined and cannot
be changed by the operator.
As another option, a plurality of predetermined payees and signature blocks
may be coded into the system, and the system may be programmed to
selectively switch between the payees for production of different drafts.
This feature accommodates the use of a single system to make collections
for several companies. What is important is that the payees of the system
be limited to predetermined payees so that a dishonest person gaining
access to the system cannot generate unauthorized drafts payable to that
person or to some entity controlled by that person.
The automated clearing house information 1012 is printed in a
machine-readable font compatible with automated check clearing systems,
according to standards promulgated by the American Banking Association.
This automated clearing house information 1012 includes the financial
institution's identification number, the account number, the check number,
and may also include the amount. Each field is separated by designated
field identification characters, according to the appropriate ABA check
printing standards.
Preferably, the system operates to place the check number in varying
locations within the automated clearing house information depending on the
practice of the financial institution involved. For example, personal
checks drawn on banks usually have the check number at the end of the data
line. Business accounts usually have the check number in front of the bank
routing number, and credit unions usually place the check number between
the routing number and the account number information. In one embodiment,
the placement of the check number is determined by an operator input. In
another embodiment, information defining the placement of the check number
can be included in the bank information database associated with the
system and the proper placement of check numbers can be determined
automatically by the system through reference to the database.
The signature block 1014 of draft 1000 is generated for a signature other
than the signatures under which the bank is normally authorized to pay
drafts, i.e. a signature other than the payor's. Preferably, the signature
block is prepared for the payee or an agent, acting "as authorized
signatory for" the payor. In this case, the payee or an agent of the
parties would execute the draft on behalf of the payee. Alternatively, the
system could be programmed to print marks legally effective as a
"signature" on the draft, eliminating the need for any manual signing.
This formatting of the draft may be accomplished immediately following
input of the draft defining information, or more preferably the draft
information may be permanently archived and/or temporarily stored in a
more compact form. Formatting, in terms of positioning of information and
fonts, may then be performed immediately prior to printing of the draft.
The formatted data is then transmitted to the draft printer as shown in
block 218 of FIG. 2 to produce a draft output as shown in FIG. 10. The
draft is preferably printed on security paper of the type with a
background pattern that makes the occurrence of erasures or other
modifications apparent. As noted before, the entire draft, or at least the
portion of the draft which will be read by automated character recognition
equipment at automated check clearing houses, may be printed in ink which
is compatible with these systems. Presently, an ink having a magnetic
component is used in these systems, and this ink should be used when
producing a draft to be automatically processed.
Security functions are particularly important in the present invention
since there is a clear potential for misuse of this invention if the
system is designed improperly and access to the system 100 is obtained by
dishonest persons. However, the preferred embodiment has several features
which prevent unauthorized persons from generating unauthorized drafts
payable to themselves. First, the system is preferably provided with
password protection so that access to the draft printing functions cannot
be obtained by unauthorized persons. As a second level of defense, the
software is preferably encoded so that each copy of the software will
print only drafts payable to a predetermined payee. That is, the payee is
hard-coded into the program and cannot be readily changed even by an
authorized user of the system. Generally, the predetermined payee will be
the company operating the system. Preferably, the coding of the payee into
the program will not be in a sequential ASCII format which could be
readily reviewed and changed by a person with even limited knowledge of
computers. The payee information is preferably encoded using a code
operator and/or scrambled and dispersed through the program file, so that
modification of the payee would require decompiling and extensive study of
the program. This feature removes the incentive for fraud by ensuring that
any fraudulent drafts printed will be payable to the order of the company,
rather than being payable to any individual operator.
The system of the present invention has heretofore been described in terms
of a stand-alone system which receives data entry and prints drafts.
However, further security advantages are obtained in another preferred
embodiment, shown in FIG. 8, in which the draft printing functions are
performed in a central secure location. As shown in FIG. 8, the computer
102 and associated screen 104 and keyboard 106 are placed in a first
location 800. In this embodiment, it will be desirable to provide a
plurality of computers 102 and associated components in dispersed
locations 800. The computer 102 is connected through fax modem 112 to a
telephone line 801, which is a means for establishing a data transfer
connection between computer 102 and a computer 802 in a location remote
from location 800. Computer 802 is connected to printer 108 with magnetic
ink cartridge 110, which prints drafts in response to data received from
computer 102 over telephone line 801. The functions described previously
for computer 102 with reference to FIG. 2 can be divided between computers
102 and 802 in any desired manner. For example, only the data entry
functions might be performed at computer 102 and the data transmitted to
computer 802 for performance of all other functions. However, it has been
found to be particularly advantageous to divide these functions so that
the data entry and verification functions (blocks 202-210 of FIG. 2) are
performed in computer 102 at location 800 and the draft formatting and
printing functions (blocks 216-218 of FIG. 2) are performed in computer
802. The functions of storing future transactions and verifying funds
availability (blocks 214-216 of FIG. 2) can be performed in either
location depending on staffing and the organization of the system users.
Variations on this embodiment are also possible. In particular, the data
transfer connection means between computer 102 and computer 802 need not
be a telephone line, but could be any data transfer system, including a
local area network, packet switching system, cellular telephone, radio
transmission system, satellite transmission system, infrared transmission
system, diskette or other mass storage transfer, or other method of
transferring data from one location to another. Also, data verification
functions might be performed at computer 102 and repeated by computer 802
before computer 802 prints the draft.
In another desirable embodiment, the central computer 802 may receive draft
information in a batch file which can be transmitted by a communications
link, by diskette, or other means of transferring data. The batch file
will contain the information necessary to generate at least one and
generally a large number of drafts. The central computer 802 will
preferably verify the data for each draft in the batch file before
printing the draft and will display or print out an exception report
listing any drafts which could not be processed because of incorrect bank
routing numbers or other criteria which were not met during the
verification process. Preferably, the data is also verified at the time of
original entry so that the operator can correct erroneous data before
processing of the drafts. However, the verification process may take place
at either or both times and locations within the scope of the present
invention.
The timing of the transfer of data from computer 102 to computer 802 can be
adjusted to achieve particular desired advantages depending on the use of
the system. The data defining each draft can be transferred to the
computer 802 immediately upon collection of the data, or the data for a
draft can be stored and transmitted to computer 802 as part of a mass
transmission of a group of drafts to be printed. As an example, the draft
information could be transmitted, and drafts printed, at the end of the
business day or at a predetermined number of times during a business day.
The software program according to the present invention can be designed
according to a number of schemes, using a variety of languages and
platforms as will be appreciated by those skilled in the art, and the
invention is in no way limited to the embodiment of the software disclosed
herein. In a preferred embodiment illustrated in the block diagram of FIG.
9, the software design includes a front end processing program 902 which
is a customized database program implemented in a standard database
platform. One suitable platform is Clipper (.TM.) sold by Computer
Associates of San Jose, Calif. Source code for a Clipper-based front end
program 902 according to the present invention is provided in the software
appendix. Generally, this program implements the software functions (see
flow chart of FIG. 2) by providing menu functions 903, including data
entry functions, and an interface to the required verification data files
905. When drafts are to be printed, the main database program preferably
passes control to a font/formatting program 904 which may be Page Garden
(.TM.) software manufactured by Block Publishing, 800 S.W. 37th Ave.,
Suite 765, Coral Cables Fla. 33134, or any other appropriate font and
formatting control platform. Generally, the font/formatting program 904
receives draft production data from the database program 902 in the form
of an output file such as an ASCII formatted file. The font/formatting
program 904 will then format and arrange the input data in an appropriate
form for output as a formatted draft. In particular, font/formatting
program 904 will place the data items in the appropriate line and column
on the draft, download appropriate fonts to an attached printer as
required to print the draft, and produce commands to select these fonts
during printing so that the various information items on the draft appear
in an appropriate manner.
A particularly desirable function of the font/formatting program is the
provision of a standard bank number font which is recognized by automated
check processing equipment, and the printing of the ABA number, check
number, account number, and optionally the amount, in the proper format at
the bottom of the draft according to ABA standards for checks. As noted
above, it will be preferably to connect the output of font/formatting
program 904 to a printer that will print at least this bank processing
information using magnetic ink, or other printing standards which may be
developed to enhance automated check clearing house operations.
While the font/formatting functions may be most easily implemented using a
platform designed for this general purpose such as the Page Garden program
described above, these printing control functions could also be programmed
into the database program 902 or a custom output formatting program could
be used.
The main database program 902 is also connected to selectively initiate
operation of fax control program 906. Fax control program 906 is
preferably software provided as part of fax modem 112 (shown in FIGS. 1
and 8). Fax control program 906 preferably operates from a DOS command
line interface and the main database program 902 is programmed to spawn a
DOS shell and execute the desired functions. Fax control program 906
operates when activated to receive a data file defining a fax image and a
destination telephone number, and then activates fax modem 112 (shown in
FIGS. 1 and 8) to dial the desired telephone number and transmit the
specified fax image. This functionality is used in transmitting a
facsimile verification request to a financial institution as described
previously. Specifically, after entry of the data defining a draft, fax
verification may be indicated, either by selection of the operator or
because certain criteria are met, such as the transaction originating in a
particular area or the payor having either a nonexistent or poor payment
history with the creditor.
When fax verification is indicated, database program 902 will access the
record in data files 905 defining the financial institution which holds
the debtor's account. Typically, this record will already be available to
the database program 902 since this record is used to verify the bank
identification numbers as described previously. The database program 902
will obtain the fax number of the financial institution from the data
record and will pass this fax telephone number to fax control program 906.
The database program 902 will also insert key data describing the debtor,
the debtor's bank account number, and the amount of the proposed draft
into a form letter file to create a letter image for fax transmission to
the financial institution. This letter image file is then transmitted to
the fax control program 906 and transmitted to the destination fax
machine.
Thus, a system and method has been disclosed which quickly generates and
processes authorized drafts on a debtor's account at a financial
institution to effect payment of debts.
In its use as a tool for collection of debts, the present system provides a
clear advantage over prior art systems in that payment can be drawn from
the account of a debtor immediately upon a telephone authorization from
the debtor. The system can be constructed at relatively little expense as
a stand-alone system that is practical for use by small agencies and
companies who normally do not have access to electronic funds transfer
systems.
The system also provides significant advantages for businesses seeking an
improved method of receiving payment for goods and services ordered by
telephone. The system avoids the disadvantages of cash-on-delivery
arrangements and eliminates the delay in completion of the transaction
inherently required if the customer must mail a check to the seller to
initiate shipment of the goods or performance of the services. Also, as a
payment method, this system offers advantages similar to those found in
the use of credit cards, but does not require that the purchaser have a
credit card. Figures from the American Banker's Association show that only
80 million Americans have access to a credit card, but over 183 million
have checking accounts. Therefore, the present system and method improves
access to mail order goods and services for those who do not have a credit
card. Finally, by generating the draft at the payee location rather than
the payor location, the present system and method reduces postage costs
and prevents lost mail by providing immediate delivery of the draft to the
payee.
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