Spectrum-based deep neural networks for fraud detection

In this paper, we focus on fraud detection on a signed graph with only a small set of labeled training data. We propose a novel framework that combines deep neural networks and spectral graph analysis. In particular, we use the node projection (called as spectral coordinate) in the low dimensional spectral space of the graph's adjacency matrix as input of deep neural networks. Spectral coordinates in the spectral space capture the most useful topology information of the network. Due to the small dimension of spectral coordinates (compared with the dimension of the adjacency matrix derived from a graph), training deep neural networks becomes feasible. We develop and evaluate two neural networks, deep autoencoder and convolutional neural network, in our fraud detection framework. Experimental results on a real signed graph show that our spectrum based deep neural networks are effective in fraud detection

Electronic fraud detection in the U.S. Medicaid Healthcare Program: lessons learned from other industries

It is estimated that between $600 and$850 billion annually is lost to fraud, waste, and abuse in the US healthcare system,with $125 to$175 billion of this due to fraudulent activity (Kelley 2009). Medicaid, a state-run, federally-matchedgovernment program which accounts for roughly one-quarter of all healthcare expenses in the US, has been particularlysusceptible targets for fraud in recent years. With escalating overall healthcare costs, payers, especially government-runprograms, must seek savings throughout the system to maintain reasonable quality of care standards. As such, the need foreffective fraud detection and prevention is critical. Electronic fraud detection systems are widely used in the insurance,telecommunications, and financial sectors. What lessons can be learned from these efforts and applied to improve frauddetection in the Medicaid health care program? In this paper, we conduct a systematic literature study to analyze theapplicability of existing electronic fraud detection techniques in similar industries to the US Medicaid program

SAFE: A Neural Survival Analysis Model for Fraud Early Detection

Many online platforms have deployed anti-fraud systems to detect and prevent fraudulent activities. However, there is usually a gap between the time that a user commits a fraudulent action and the time that the user is suspended by the platform. How to detect fraudsters in time is a challenging problem. Most of the existing approaches adopt classifiers to predict fraudsters given their activity sequences along time. The main drawback of classification models is that the prediction results between consecutive timestamps are often inconsistent. In this paper, we propose a survival analysis based fraud early detection model, SAFE, which maps dynamic user activities to survival probabilities that are guaranteed to be monotonically decreasing along time. SAFE adopts recurrent neural network (RNN) to handle user activity sequences and directly outputs hazard values at each timestamp, and then, survival probability derived from hazard values is deployed to achieve consistent predictions. Because we only observe the user suspended time instead of the fraudulent activity time in the training data, we revise the loss function of the regular survival model to achieve fraud early detection. Experimental results on two real world datasets demonstrate that SAFE outperforms both the survival analysis model and recurrent neural network model alone as well as state-of-the-art fraud early detection approaches.Comment: To appear in AAAI-201

Perspectives on retail payments fraud

Payment systems ; Fraud

Forging success : Soviet managers and accounting fraud, 1943 to 1962

Attempting to satisfy their political masters in a target-driven culture, Soviet managers had to optimize on many margins simultaneously. One of these was the margin of truthfulness. False accounting for the value of production was apparently widespread in some branches of the economy and at some periods of time. A feature of accounting fraud was that cases commonly involved the aggravating element of conspiracy. The paper provides new evidence on the nature and extent of accounting fraud; the scale and optimal size of conspiratorial networks; the authorities’ willingness to penalize it and the political and social factors that secured leniency; and inefficiency in the socialist market where managers competed for political credit