Fraud-Agents Detection in Online Microfinance: A Large-Scale Empirical Study

Abstract

Online Microlending, a new financial service, focuses on small loans without any sort of collateral. It provides more flexible and quicker funding for borrowers, as well as higher interest rates of return. For platforms that provide such services, an essential task is to adequately evaluate each loan’s risk so as to minimize the possible financial loss. However, there exists a special group of borrowers, namely <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">fraud-agents</i> , who gain illegal profits from inciting other borrowers to cheat, i.e., they help the high-risk borrowers evade the risk evaluation by crafting fake personal information. The existence of fraud-agents poses a severe threat to the risk management systems and results in a huge financial loss for lending platforms. In this article, we present the first machine learning-based solution to detect fraud-agents in online microlending. The key challenge of this decade-long problem is that it is unclear how to construct effective features from multiple behavior logs such as phone call history, address book, loan history and activity logs of borrowers. To address this problem, we first conduct an empirical study on over 600K borrowers to gain some insights on the adversarial behaviors of fraud-agents comparing to normal borrowers and benign-agents. Based on the study, we are able to design a total of 26 features, falling into four groups, for fraud agent detection. Then, we propose a two-stage detection model to address the challenge of limited number of labeled fraud agent examples. The evaluation results show that our method can achieve a precision of 94.30%. We deploy our method on a real large online microlending platform with 11,953,273 borrowers, and we identify 29,727 fraud-agents from them. The domain experts from the platform confirm that 95.59% of them are real fraud-agents, and have added them to the platform’s internal blacklist. We further conduct a measurement study on those fraud-agents to share deeper insights on their adversarial behaviors.