A method and system for identifying patterns of payment account (e.g.,
credit card account) transactions that have a high probability of being
part of a fraudulent scheme. Certain merchant accounts and payment
accounts may have been obtained under false pretenses. For example, the
payment accounts may have been obtained with the intention of never
paying the bills with a true instrument. Merchant accounts may have been
obtained in order to perform transactions either with payment accounts
obtained under false pretenses or with stolen payment account
information. To detect suspicious patterns of account activity, payment
accounts that are new or exhibit a substantial increase in account
activity are first identified. Merchant accounts having an unusually
large number or value of transactions with such new or newly active
payment accounts are also identified. Such merchants and payment accounts
can then be subjected to further scrutiny by the affected institutions.