Credit Card Fraud Detection Research Articles

Leveraging Mixture of Experts and Deep Learning-Based Data Rebalancing to Improve Credit Fraud Detection

Credit card fraud detection is a critical challenge in the financial sector due to the rapidly evolving tactics of fraudsters and the significant class imbalance betweenegitimate and fraudulent transactions. Traditional models, while effective to some extent, often suffer from high false positive rates and fail to generalize well to emerging fraud patterns. In this paper, we propose a novel approach that integrates a Mixture of Experts (MoE) model with a Deep Neural Network-based Synthetic Minority Over-sampling Technique (DNN-SMOTE) to enhance fraud detection performance. The MoE modeleverages multiple specialized expert networks, each trained to detect specific types of fraud, while the DNN-SMOTE generates high-quality synthetic samples to address the class imbalance. Our experimental results on a publicly available dataset demonstrate that the proposed method achieves a classification accuracy of 99.93%, a true positive rate of 84.69%, and a true negative rate of 99.95%. The Matthews Correlation Coefficient (MCC) of 0.7883 further highlights the model’s balanced performance in detecting fraudulent transactions. These results underscore the effectiveness of combining MoE with DNN-SMOTE, offering a robust solution for real-world credit card fraud detection scenarios.

Enhanced federated anomaly detection through autoencoders using summary statistics-based thresholding

In Federated Learning, Anomaly Detection poses significant challenges due to the decentralized nature of data, especially under Non-IID distributions. This study proposes a federated threshold calculation method that aggregates summary statistics from normal and anomalous data across clients to create a global threshold for Anomaly Detection with federated Autoencoders, enhancing detection accuracy and robustness while ensuring privacy. Extensive experiments on datasets, including Credit Card Fraud Detection, Shuttle, and Covertype, show that our approach consistently outperforms existing federated and local threshold calculation methods. These findings highlight the potential of summary statistics in improving federated Anomaly Detection under Non-IID conditions.

Securing transactions: a hybrid dependable ensemble machine learning model using IHT-LR and grid search

Financial institutions and businesses face an ongoing challenge from fraudulent transactions, prompting the need for effective detection methods. Detecting credit card fraud is crucial for identifying and preventing unauthorized transactions. While credit card fraud incidents are relatively rare, they can result in substantial financial losses, particularly due to the high monetary value associated with fraudulent transactions. Timely detection of fraud enables investigators to take swift actions to mitigate further losses. However, the investigation process is often time-consuming, limiting the number of alerts that can be thoroughly examined each day. Therefore, the primary objective of a fraud detection model is to provide accurate alerts while minimizing false alarms and missed fraud cases. In this paper, we introduce a state-of-the-art hybrid ensemble (ENS) dependable machine learning (ML) model that intelligently combines multiple algorithms with proper weighted optimization using grid search, including decision tree (DT), random forest (RF), K-nearest neighbor (KNN), and multilayer perceptron (MLP), to enhance fraud identification. To address the data imbalance issue, we employ the instant hardness threshold (IHT) technique in conjunction with logistic regression (LR), surpassing conventional approaches. Our experiments are conducted on a publicly available credit card dataset comprising 284,807 transactions. The proposed model achieves impressive accuracy rates of 99.66%, 99.73%, 98.56%, and 99.79%, and a perfect 100% for the DT, RF, KNN, MLP and ENS models, respectively. The hybrid ensemble model outperforms existing works, establishing a new benchmark for detecting fraudulent transactions in high-frequency scenarios. The results highlight the effectiveness and reliability of our approach, demonstrating superior performance metrics and showcasing its exceptional potential for real-world fraud detection applications.

The Importance of Credit Card Fraud Detection in the Digital Age

It is true that credit card transactions pave part of daily life in today’s digital economy. Also, it is undeniable that this assurance comes at a cost: it has inadvertently opened the floodgate on one of the most daunting challenges to financial safety-credit card fraud. Credit card fraud causes billions of dollars in losses annually, which is brought about by unauthorized transactions carried out using information related to stolen or cloned credit cards. As such, fraud is very difficult to trace and prevent because advanced technologies and strategies are involved.

Improvement The Accuracy of Convolutional Neural Network with Using Undersampling Method on Unbalanced Credit Card Dataset

In this study, we address the challenge of imbalanced data in credit card fraud detection by proposing a novel approach that leverages Convolutional Neural Networks (CNNs) and undersampling techniques. The imbalance in the dataset, typical of real-world financial transactions, often leads to biased models favoring the majority class. To mitigate this, we employ undersampling to balance the classes, thereby enhancing the CNN's ability to learn from minority instances crucial for fraud detection. Our method is validated on a large unbalanced credit card dataset, demonstrating significant improvements in accuracy compared to traditional CNN models trained on imbalanced data. We evaluate our approach using standard performance metrics, including precision, recall, and F1-score, showcasing its effectiveness in accurately identifying fraudulent transactions while minimizing false positives. Furthermore, we pro-vide insights into the CNN's decision-making process through visualization techniques, shedding light on its ability to discern fraudulent patterns within the data. Our findings highlight the importance of addressing class imbalance in fraud detection tasks and underscore the efficacy of undersampling in enhancing the performance of deep learning models, particularly CNNs, in handling imbalanced datasets.

A Supervised Ml Algorithm for Detecting and Predicting Fraud Credit Card Transactions

A Credit card fraud presents an escalating threat in today's digital economy, leading to significant financial losses for consumers, businesses, and financial institutions. Traditional detection methods are increasingly inadequate due to the rise in online transactions and the evolving complexity of fraudulent activities. This research aims to create a reliable supervised machine learning model designed to detect and predict fraudulent credit card transactions in real-time. Our approach leverages advanced algorithms and extensive datasets to enhance transaction security, thereby mitigating financial risks. Current systems, like FICO's Fraud Detection System (FDS), utilize a range of supervised learning techniques, including Decision Trees, Random Forests, and Neural Networks. However, they face limitations, including data quality issues, high false positive rates, and the need for continuous retraining to adapt to evolving fraud patterns. To address these challenges, we propose an innovative anomaly detection method based on the Isolation Forest algorithm. Unlike traditional methods that rely on distance and density measures, Isolation Forests isolate anomalies by randomly selecting features and split values, making it more efficient in identifying fraudulent transactions, especially in imbalanced datasets. The proposed system boasts low linear time complexity and minimal memory requirements, enabling the construction of high-performing models even with large datasets. The research demonstrates that the Isolation Forest approach significantly outperforms traditional models in detecting credit card fraud, offering a promising solution for enhancing security in the financial ecosystem.

A Review on Robust Credit Card Fraud Detection System Leveraging Big Data and Machine Learning

This review offers a detailed strategy to address the growing threat of credit card fraud in today's digital landscape. By utilizing Big Data analytics alongside machine learning methods, the system aims to transform fraud detection processes. It tackles the challenges arising from the increasing volume and complexity of credit card transactions, enabling the real-time detection and prevention of fraudulent actions. The system employs sophisticated machine learning algorithms to identify patterns and anomalies linked to fraudulent activities, allowing for proactive responses to emerging fraud tactics. Additionally, the system is optimized to handle and analyze large datasets efficiently, ensuring timely and precise detection of fraud. It also incorporates strong security protocols to protect sensitive customer data while adhering to privacy regulations. This review ultimately seeks to enhance the safety and reliability of electronic payments, protecting financial institutions and consumers from the harmful effects of credit card fraud.

An AutoEncoder enhanced light gradient boosting machine method for credit card fraud detection

Online financial transactions bring convenience to people’s lives, but also present vulnerabilities for criminals to embezzle users’ accounts and trick users into credit card fraud. Although machine learning methods have been adopted to detect anomalous transactions, it’s hard for a single machine learning method to achieve satisfying results with the increasing scale and dimensionality of financial datasets. In addition, for anomaly detection of financial data, there is an obvious imbalance between normal records and abnormal. In this situation, the experimental results cannot be objectively evaluated only by the traditional metrics, such as precision, recall, and accuracy. This paper proposes an AutoEncoder enhanced LightGBM method for credit card detection. The method inherits the advantages of each component, using an AutoEncoder for feature reconstruction on the dataset, and integrating the LightGBM algorithm for improving the GBDT (Gradient Boosting Decison Tree) to detect abnormal data more accurately and efficiently. Besides the traditional evaluation metrics, F-measure, area under curve (AUC), Matthew’s correlation coefficient (MCC), and balanced classification rate (BCR) are also adopted as the evaluation metrics. Two financial datasets were used to validate the performance and robustness of the proposed model. Results obtained from the credit card fraud dataset containing 31 features indicate that our model significantly outperforms other models with a recall of 94.85%, representing a 10.70% improvement compared to the best detection performance model with a recall of only 86%. Additionally, our model’s BCR score is also significantly better than other models, with a BCR score of 97%, as opposed to the best detection performance model’s BCR score of 92%, representing a 5% improvement by our model. Various sampling methods and model combinations were considered in this study. It was found that the SMOTE algorithm combined with the proposed model produced the best results, with an AUC value of 96.83% and an F-measure score of 80.27%. The Santander bank transaction record dataset is a high dimensional large dataset containing 200 features. Experimental results on this dataset reveal that compared to other models, our model significantly improved recall and F-measure results, raising the recall to 94.14% and the F-measure score by 11.51%, surpassing the second-best-performing model. Overall, these findings demonstrate the robustness and superiority of our model in detecting fraudulent transactions and highlight the effectiveness of the SMOTE algorithm in combination with the proposed model.

Deep adaptive ensemble learning for imbalanced credit card fraud detection

ABSTRACT Traditional techniques for credit card fraud detection often struggle with highly imbalanced datasets, which compounds the complexity of fraudulent transaction detection. To tackle this issue, the current paper puts forth a novel technique known as deep adaptive ensemble learning (DAEL). Initially, we employ the ensemble-based under-sampling method to bring equilibrium to the data. This is followed by the application of a deep autoencoder for the purpose of feature extraction and dimensionality reduction. Then, a bidirectional long short-term memory model is trained using the features extracted from the autoencoder. Finally, an adaptive weighting technique is applied to unify multiple models. The empirical results demonstrate that the proposed DAEL technique significantly surpasses individual models and conventional ensemble learning techniques in performance.

FRAUD DETECTION IN FINANCIAL TRANSACTIONS THROUGH DATA SCIENCE FOR REAL-TIME MONITORING AND PREVENTION

This study presents a comprehensive review of the use of advanced technologies in credit card fraud detection, with a focus on machine learning, blockchain, and federated learning, to understand their transformative impact on the field. Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, a total of 97 articles were systematically reviewed and analyzed. The findings reveal that machine learning models, such as decision trees, support vector machines, and neural networks, have significantly improved fraud detection accuracy, reducing false positives and enhancing the ability to detect complex fraud patterns in real-time. Blockchain technology also plays a critical role by providing a decentralized, secure, and transparent framework for fraud detection, ensuring the integrity of transaction records and making fraudulent activities harder to conceal. Federated learning offers a privacy-preserving solution, enabling institutions to collaborate on fraud detection without sharing sensitive data, which is increasingly important in light of stringent regulatory requirements. Additionally, the study highlights the growing use of predictive analytics in forecasting potential fraud, allowing financial institutions to proactively prevent fraud before it occurs. Moreover, feedback loops integrated into fraud detection models allow for continuous improvement, ensuring that detection systems can adapt to new and evolving fraud tactics. Overall, the review underscores the importance of adopting these advanced technologies to build more secure, efficient, and adaptive fraud detection systems capable of safeguarding financial transactions in the modern digital economy.

A Hybrid Deep Learning Approach with Generative Adversarial Network for Credit Card Fraud Detection

Credit card fraud detection is a critical challenge in the financial industry, with substantial economic implications. Conventional machine learning (ML) techniques often fail to adapt to evolving fraud patterns and underperform with imbalanced datasets. This study proposes a hybrid deep learning framework that integrates Generative Adversarial Networks (GANs) with Recurrent Neural Networks (RNNs) to enhance fraud detection capabilities. The GAN component generates realistic synthetic fraudulent transactions, addressing data imbalance and enhancing the training set. The discriminator, implemented using various DL architectures, including Simple RNN, Long Short-Term Memory (LSTM) networks, and Gated Recurrent Units (GRUs), is trained to distinguish between real and synthetic transactions and further fine-tuned to classify transactions as fraudulent or legitimate. Experimental results demonstrate significant improvements over traditional methods, with the GAN-GRU model achieving a sensitivity of 0.992 and specificity of 1.000 on the European credit card dataset. This work highlights the potential of GANs combined with deep learning architectures to provide a more effective and adaptable solution for credit card fraud detection.

A Spatial–Temporal Gated Network for Credit Card Fraud Detection by Learning Transactional Representations

A Spatial–Temporal Gated Network for Credit Card Fraud Detection by Learning Transactional Representations

Machine Learning for Improved Detection and Prevention of Credit Card Fraud

Using machine learning to identify instances of credit card fraud is the primary goal of the research. In order to accomplish this, we will research and assess four distinct classification models: Decision Tree, Logistic Regression, K-Nearest Neighbours (KNN), and Support Vector Classifier (SVC). Included in the Kaggle dataset's "Time," "Amount," and "Class" sections are transaction data points that represent the likelihood of fraud. Disparities in class distribution are a big problem with this dataset, even though 99.83% of the data comes from legitimate transactions. Disparity like this has the potential to lead to biassed model training. We resolved the issue by implementing preprocessing techniques such as feature scaling and resampling. F1-Score, recall, accuracy, and precision are the measures that we use to assess the models. With scores ranging from 93% to 94%, the data demonstrate that all models are incredibly accurate. Having said that, Logistic Regression lacks precision. All things considered, Decision Tree, KNN, and SVC perform very well. The proposed model's accuracy peaked at 94%. As this study demonstrates, thorough evaluation criteria are necessary for finding the optimal model for fraud detection.

The Data Analysis of Enterprise Operational Risk Prediction Under Machine Learning

In the digital age, the financial sector faces increasingly severe risk management challenges. Traditional methods often rely on historical data and statistical models, which struggle to cope with the high volatility of the market. These methods exhibit poor adaptability in rapidly changing financial markets and often fail to meet demands in terms of accuracy and reliability. To address these issues, this study proposes a law risk prediction model based on deep learning—the WBIF model. This model integrates Bidirectional Long Short-Term Memory (BiLSTM) and Fully Convolutional Networks (FCN) and employs the Whale Optimization Algorithm (WOA) for parameter optimization. Experimental results show that compared to traditional models, the WBIF model reduces the Mean Absolute Error (MAE) by 51.73% on the UCI machine learning library dataset and improves accuracy by 12% on the Kaggle credit card fraud detection dataset.

Leveraging graph-based learning for credit card fraud detection: a comparative study of classical, deep learning and graph-based approaches

Leveraging graph-based learning for credit card fraud detection: a comparative study of classical, deep learning and graph-based approaches

FBLearn: Decentralized Platform for Federated Learning on Blockchain

In recent years, rapid technological advancements have propelled blockchain and artificial intelligence (AI) into prominent roles within the digital industry, each having unique applications. Blockchain, recognized for its secure and transparent data storage, and AI, a powerful tool for data analysis and decision making, exhibit common features that render them complementary. At the same time, machine learning has become a robust and influential technology, adopted by many companies to address non-trivial technical problems. This adoption is fueled by the vast amounts of data generated and utilized in daily operations. An intriguing intersection of blockchain and AI occurs in the realm of federated learning, a distributed approach allowing multiple parties to collaboratively train a shared model without centralizing data. This paper presents a decentralized platform FBLearn for the implementation of federated learning in blockchain, which enables us to harness the benefits of federated learning without the necessity of exchanging sensitive customer or product data, thereby fostering trustless collaboration. As the decentralized blockchain network is introduced in the distributed model training to replace the centralized server, global model aggregation approaches have to be utilized. This paper investigates several techniques for model aggregation based on the local model average and ensemble using either local or globally distributed validation data for model evaluation. The suggested aggregation approaches are experimentally evaluated based on two use cases of the FBLearn platform: credit risk scoring using a random forest classifier and credit card fraud detection using a logistic regression. The experimental results confirm that the suggested adaptive weight calculation and ensemble techniques based on the quality of local training data enhance the robustness of the global model. The performance evaluation metrics and ROC curves prove that the aggregation strategies successfully isolate the influence of the low-quality models on the final model. The proposed system’s ability to outperform models created with separate datasets underscores its potential to enhance collaborative efforts and to improve the accuracy of the final global model compared to each of the local models. Integrating blockchain and federated learning presents a forward-looking approach to data collaboration while addressing privacy concerns.

Credit Shield Solutions: Credit Card Fraud Detection System Using Machine Learning Approach

Credit Shield Solutions: Credit Card Fraud Detection System Using Machine Learning Approach

CREDIT CARD FRAUD DETECTION USING MACHINE LEARNING

The rise of e-commerce and digital payment systems has been accompanied by an increase in financial fraud, especially involving credit cards. Ensuring the detection of fraudulent activities is crucial to protecting users' financial assets and preserving trust in online transactions. This study introduces a novel method for detecting credit card fraud by integrating machine learning (ML) techniques with a genetic algorithm (GA) for feature selection. Feature selection plays a vital role in improving fraud detection models by pinpointing the most relevant features linked to fraudulent transactions. The effectiveness of the proposed method is assessed using a dataset from European cardholders, a widely used benchmark in this research area. In terms of performance, the Isolation Forest Algorithm exhibits slightly higher accuracy compared to the Local Outlier Factor (LOF) Algorithm. Consequently, based on accuracy alone, the Isolation Forest Algorithm is deemed more effective for this specific dataset. Keywords: Credit card fraud detection, Machine learning (ML), E-commerce.

Identifying Credit Card Fraud with Machine Learning: Evaluation of Algorithms and Oversampling Techniques

The physical loss of a credit card or the theft of sensitive credit card data is referred to as credit card fraud. For detection, a variety of machine learning methods can be applied. This study presents several algorithms for identifying transactions as authentic or fraudulent. The study used the credit card fraud detection dataset. The SMOTE approach was utilized for oversampling due to the extremely unbalanced nature of the dataset. Additionally, a feature selection process was carried out, and the dataset was divided into training and test sets. The experiment employed eight machine learning models, including Random Forest, AdaBoost, Support Vector Classifier, Extreme Gradient Boost, and Logistic Regression algorithms. The findings indicate that few algorithms have a high degree of accuracy when detecting credit card fraud. The Random Forest model can be applied to find further anomalies. This approach has proven to be effective in accurately detecting fraudulent activity and reducing the number of false positives and negatives. The results of the experiment also highlight the importance of feature selection in improving the performance of the models by the highest accuracy score with 96%, precision of 100, Recall of 91, and F1Scroe of 95. By using a combination of different machine learning algorithms, financial institutions can enhance their fraud detection systems and better protect their customers from potential financial losses. The findings from this study demonstrate the potential for significant advancements in the field of fraud detection using machine learning techniques.

Credit card fraud detection with advanced graph based machine learning techniques

<p>In the realm of credit card fraud detection, the landscape is continually evolving, demanding innovative approaches to stay ahead of increasingly sophisticated fraudulent activities. Our research pioneers a groundbreaking methodology that amalgamates the power of bipartite graph visualization with advanced machine learning techniques. This fusion yields a comprehensive framework capable of effectively evaluating the efficacy of a random forest classifier in uncovering fraudulent credit card transactions. Our study showcases the compelling application of this methodology, offering a paradigm shift in how we analyze and understand credit card fraud detection systems. By seamlessly integrating machine learning algorithms with network analysis, we provide a holistic view of the data, unveiling intricate patterns hidden within. At the heart of our approach lies the innovative use of bipartite graphs, which serve as a dynamic visual bridge between model predictions and real-world outcomes. This visual representation not only enhances interpretability but also facilitates a deeper understanding of the classifier’s performance. By visually mapping the relationships between transactions and their respective classifications, our methodology offers actionable insights into both successful detection and potential areas for improvement. Empowering analysts and stakeholders, our approach facilitates informed decision-making by enabling them to fine-tune model parameters and enhance the overall effectiveness of fraud detection systems. Through this synergy between cutting-edge machine learning and network analysis techniques, we provide a powerful tool to combat the critical challenge of credit card fraud prevention. Step into the future of fraud detection with our innovative methodology, where every transaction is scrutinized with precision, and where security is not just a possibility, but a promise fulfilled.</p>