A new method for fraud detection in credit cards based on transaction dynamics in subspaces

[EN] This paper presents a new method for fraud detection in credit cards based on exploiting the dynamics of the card transactions. We hypothesize different behavior models in the use of the card between legitimate clients and fraudsters that are registered in the sequential pattern that follows the transactions. The method considers analyses in subspaces defined by two or three variables recorded in the transactions. From these subspaces, several dynamic features, such as transaction velocity and acceleration, are estimated as input vectors for a classification process. Linear and quadratic discriminant analysis and random forest are implemented as single classifiers. All the single classification results obtained for each of the subspaces are late fused to obtain an overall result using alpha integration algorithm. The proposed method was evaluated using a subset of real data with a very low fraud to legitimate transaction ratio. We demonstrated that the temporal dependence of card transactions exploited in different subspaces and fused to give an overall result improves the detection accuracy of fraud detection in credit cards.This work was supported by Generalitat Valenciana under grant PROMETEO/2019/109, and Spanish Administration and European Union grant TEC2017-84743-P.Salazar Afanador, A.; Safont, G.; Vergara Domínguez, L. (2019). A new method for fraud detection in credit cards based on transaction dynamics in subspaces. IEEE. 722-725. https://doi.org/10.1109/CSCI49370.2019.00137S72272

Identifying Unauthorized Transactions On Credit Cards By Using Machine Learning Methodologies

It is essential for organizations that issue credit cards to be able to recognize fraudulent credit card transactions. This will prevent consumers from being charged for products that they did not buy with their credit card. The purpose of this project is to demonstrate the modelling of a data set via use of machine learning for the detection of credit card fraud. The problem of detecting fraudulent use of credit cards requires modelling previously completed credit card transactions using the information from those that were determined to be fraudulent. After that, this model is put to use to determine whether or not a new transaction constitutes fraudulent activity. Our goal is to appropriately handle misclassified categories by reducing the number of false Negative cases. During this stage of the process, our primary focuses have been on the analysis and preprocessing of data sets, as well as the application of multiple anomaly detection algorithms these algorithms include the local outlier factor and the isolation forest algorithm. We have used IEEE_CIS Fraud dataset, provided by the kaggle .we applied feature extraction technique to reduce the dimensionality of large dataset by extracting only those principle components with highest variance. Given the class imbalance ratio, we measured the accuracy using the Area Under the Precision-Recall Curve (AUPRC) which gives better results than any other previously used models

Machine learning methods for the characterization and classification of complex data

This thesis work presents novel methods for the analysis and classification of medical images and, more generally, complex data. First, an unsupervised machine learning method is proposed to order anterior chamber OCT (Optical Coherence Tomography) images according to a patient's risk of developing angle-closure glaucoma. In a second study, two outlier finding techniques are proposed to improve the results of above mentioned machine learning algorithm, we also show that they are applicable to a wide variety of data, including fraud detection in credit card transactions. In a third study, the topology of the vascular network of the retina, considering it a complex tree-like network is analyzed and we show that structural differences reveal the presence of glaucoma and diabetic retinopathy. In a fourth study we use a model of a laser with optical injection that presents extreme events in its intensity time-series to evaluate machine learning methods to forecast such extreme events.El presente trabajo de tesis desarrolla nuevos métodos para el análisis y clasificación de imágenes médicas y datos complejos en general. Primero, proponemos un método de aprendizaje automático sin supervisión que ordena imágenes OCT (tomografía de coherencia óptica) de la cámara anterior del ojo en función del grado de riesgo del paciente de padecer glaucoma de ángulo cerrado. Luego, desarrollamos dos métodos de detección automática de anomalías que utilizamos para mejorar los resultados del algoritmo anterior, pero que su aplicabilidad va mucho más allá, siendo útil, incluso, para la detección automática de fraudes en transacciones de tarjetas de crédito. Mostramos también, cómo al analizar la topología de la red vascular de la retina considerándola una red compleja, podemos detectar la presencia de glaucoma y de retinopatía diabética a través de diferencias estructurales. Estudiamos también un modelo de un láser con inyección óptica que presenta eventos extremos en la serie temporal de intensidad para evaluar diferentes métodos de aprendizaje automático para predecir dichos eventos extremos.Aquesta tesi desenvolupa nous mètodes per a l’anàlisi i la classificació d’imatges mèdiques i dades complexes. Hem proposat, primer, un mètode d’aprenentatge automàtic sense supervisió que ordena imatges OCT (tomografia de coherència òptica) de la cambra anterior de l’ull en funció del grau de risc del pacient de patir glaucoma d’angle tancat. Després, hem desenvolupat dos mètodes de detecció automàtica d’anomalies que hem utilitzat per millorar els resultats de l’algoritme anterior, però que la seva aplicabilitat va molt més enllà, sent útil, fins i tot, per a la detecció automàtica de fraus en transaccions de targetes de crèdit. Mostrem també, com en analitzar la topologia de la xarxa vascular de la retina considerant-la una xarxa complexa, podem detectar la presència de glaucoma i de retinopatia diabètica a través de diferències estructurals. Finalment, hem estudiat un làser amb injecció òptica, el qual presenta esdeveniments extrems en la sèrie temporal d’intensitat. Hem avaluat diferents mètodes per tal de predir-los.Postprint (published version

Unveiling the frontiers of deep learning: innovations shaping diverse domains

Deep learning (DL) enables the development of computer models that are capable of learning, visualizing, optimizing, refining, and predicting data. In recent years, DL has been applied in a range of fields, including audio-visual data processing, agriculture, transportation prediction, natural language, biomedicine, disaster management, bioinformatics, drug design, genomics, face recognition, and ecology. To explore the current state of deep learning, it is necessary to investigate the latest developments and applications of deep learning in these disciplines. However, the literature is lacking in exploring the applications of deep learning in all potential sectors. This paper thus extensively investigates the potential applications of deep learning across all major fields of study as well as the associated benefits and challenges. As evidenced in the literature, DL exhibits accuracy in prediction and analysis, makes it a powerful computational tool, and has the ability to articulate itself and optimize, making it effective in processing data with no prior training. Given its independence from training data, deep learning necessitates massive amounts of data for effective analysis and processing, much like data volume. To handle the challenge of compiling huge amounts of medical, scientific, healthcare, and environmental data for use in deep learning, gated architectures like LSTMs and GRUs can be utilized. For multimodal learning, shared neurons in the neural network for all activities and specialized neurons for particular tasks are necessary.Comment: 64 pages, 3 figures, 3 table

Unsupervised Intrusion Detection with Cross-Domain Artificial Intelligence Methods

Cybercrime is a major concern for corporations, business owners, governments and citizens, and it continues to grow in spite of increasing investments in security and fraud prevention. The main challenges in this research field are: being able to detect unknown attacks, and reducing the false positive ratio. The aim of this research work was to target both problems by leveraging four artificial intelligence techniques. The first technique is a novel unsupervised learning method based on skip-gram modeling. It was designed, developed and tested against a public dataset with popular intrusion patterns. A high accuracy and a low false positive rate were achieved without prior knowledge of attack patterns. The second technique is a novel unsupervised learning method based on topic modeling. It was applied to three related domains (network attacks, payments fraud, IoT malware traffic). A high accuracy was achieved in the three scenarios, even though the malicious activity significantly differs from one domain to the other. The third technique is a novel unsupervised learning method based on deep autoencoders, with feature selection performed by a supervised method, random forest. Obtained results showed that this technique can outperform other similar techniques. The fourth technique is based on an MLP neural network, and is applied to alert reduction in fraud prevention. This method automates manual reviews previously done by human experts, without significantly impacting accuracy

Algorithms in future capital markets: A survey on AI, ML and associated algorithms in capital markets

This paper reviews Artificial Intelligence (AI), Machine Learning (ML) and associated algorithms in future Capital Markets. New AI algorithms are constantly emerging, with each 'strain' mimicking a new form of human learning, reasoning, knowledge, and decisionmaking. The current main disrupting forms of learning include Deep Learning, Adversarial Learning, Transfer and Meta Learning. Albeit these modes of learning have been in the AI/ML field more than a decade, they now are more applicable due to the availability of data, computing power and infrastructure. These forms of learning have produced new models (e.g., Long Short-Term Memory, Generative Adversarial Networks) and leverage important applications (e.g., Natural Language Processing, Adversarial Examples, Deep Fakes, etc.). These new models and applications will drive changes in future Capital Markets, so it is important to understand their computational strengths and weaknesses. Since ML algorithms effectively self-program and evolve dynamically, financial institutions and regulators are becoming increasingly concerned with ensuring there remains a modicum of human control, focusing on Algorithmic Interpretability/Explainability, Robustness and Legality. For example, the concern is that, in the future, an ecology of trading algorithms across different institutions may 'conspire' and become unintentionally fraudulent (cf. LIBOR) or subject to subversion through compromised datasets (e.g. Microsoft Tay). New and unique forms of systemic risks can emerge, potentially coming from excessive algorithmic complexity. The contribution of this paper is to review AI, ML and associated algorithms, their computational strengths and weaknesses, and discuss their future impact on the Capital Markets