838 research outputs found
Concept drift and machine learning model for detecting fraudulent transactions in streaming environment
In a streaming environment, data is continuously generated and processed in an ongoing manner, and it is necessary to detect fraudulent transactions quickly to prevent significant financial losses. Hence, this paper proposes a machine learning-based approach for detecting fraudulent transactions in a streaming environment, with a focus on addressing concept drift. The approach utilizes the extreme gradient boosting (XGBoost) algorithm. Additionally, the approach employs four algorithms for detecting continuous stream drift. To evaluate the effectiveness of the approach, two datasets are used: a credit card dataset and a Twitter dataset containing financial fraud-related social media data. The approach is evaluated using cross-validation and the results demonstrate that it outperforms traditional machine learning models in terms of accuracy, precision, and recall, and is more robust to concept drift. The proposed approach can be utilized as a real-time fraud detection system in various industries, including finance, insurance, and e-commerce
Streaming Active Learning Strategies for Real-Life Credit Card Fraud Detection: Assessment and Visualization
Credit card fraud detection is a very challenging problem because of the
specific nature of transaction data and the labeling process. The transaction
data is peculiar because they are obtained in a streaming fashion, they are
strongly imbalanced and prone to non-stationarity. The labeling is the outcome
of an active learning process, as every day human investigators contact only a
small number of cardholders (associated to the riskiest transactions) and
obtain the class (fraud or genuine) of the related transactions. An adequate
selection of the set of cardholders is therefore crucial for an efficient fraud
detection process. In this paper, we present a number of active learning
strategies and we investigate their fraud detection accuracies. We compare
different criteria (supervised, semi-supervised and unsupervised) to query
unlabeled transactions. Finally, we highlight the existence of an
exploitation/exploration trade-off for active learning in the context of fraud
detection, which has so far been overlooked in the literature
Adversarial Learning in Real-World Fraud Detection: Challenges and Perspectives
Data economy relies on data-driven systems and complex machine learning
applications are fueled by them. Unfortunately, however, machine learning
models are exposed to fraudulent activities and adversarial attacks, which
threaten their security and trustworthiness. In the last decade or so, the
research interest on adversarial machine learning has grown significantly,
revealing how learning applications could be severely impacted by effective
attacks. Although early results of adversarial machine learning indicate the
huge potential of the approach to specific domains such as image processing,
still there is a gap in both the research literature and practice regarding how
to generalize adversarial techniques in other domains and applications. Fraud
detection is a critical defense mechanism for data economy, as it is for other
applications as well, which poses several challenges for machine learning. In
this work, we describe how attacks against fraud detection systems differ from
other applications of adversarial machine learning, and propose a number of
interesting directions to bridge this gap
FraudMemory: Explainable Memory-Enhanced Sequential Neural Networks for Financial Fraud Detection
The rapid development of electronic financial services brings significant convenience to our daily life. However, it also offers criminals the opportunity to exploit financial systems to do fraudulent transactions. Previous studies on fraud detection only deal with single type transactions and cannot adapt well to evolving environment in reality. In addition, their black box models pay less attention on the interpretability of fraud detection results. Here we propose a novel fraud detection algorithm called FraudMemory. It adopts state-of-art feature representation methods to better depict users and logs with multiple types in financial systems. Our model innovatively uses sequential model to capture the sequential patterns of each transaction and leverages memory networks to improve both the performance and interpretability. Also, with the incorporation of memory components, FraudMemory possesses high adaptability to the existence of concept drift. The empirical study proves that our model is a potential tool for financial fraud detection
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