A framework for internal fraud risk reduction at it integrating business processes : the IFR² framework

Fraud is a million dollar business and it is increasing every year. Both internal and external fraud present a substantial cost to our economy worldwide. A review of the academic literature learns that the academic community only addresses external fraud and how to detect this type of fraud. Little or no effort to our knowledge has been put in investigating how to prevent ánd to detect internal fraud, which we call ‘internal fraud risk reduction’. Taking together the urge for research in internal fraud and the lack of it in academic literature, research to reduce internal fraud risk is pivotal. Only after having a framework in which to implement empirical research, this topic can further be investigated. In this paper we present the IFR² framework, deduced from both the academic literature and from current business practices, where the core of this framework suggests to use a data mining approach.El fraude es un negocio millonario y está aumentando cada año. Tanto el fraude interno como el externo presentan un coste considerable para nuestra economía en todo el mundo. Este artículo sobre la literatura académica enseña que la comunidad académica solo se dirige al fraude externo, y cómo se detecta este tipo de fraude. Que sepamos, se ha hecho poco o ningún esfuerzo en investigar cómo evitar y detectar el fraude interno, al que llamamos ‘reducción del riesgo de fraude interno’. Teniendo en cuenta la urgencia de investigar el fraude interno, y la ausencia de ello en la literatura académica, la investigación para reducir este tipo de fraude es esencial. Este tema puede ser aún investigado con mayor profundidad solo después de tener un marco, en el que implementar investigación empírica. En este artículo, presentamos el marco IFR, deducido tanto de la literatura académica como de las prácticas empresariales actuales, donde el foco del marco sugiere usar un enfoque de extracción de datos

A Comprehensive Survey of Data Mining-based Fraud Detection Research

This survey paper categorises, compares, and summarises from almost all published technical and review articles in automated fraud detection within the last 10 years. It defines the professional fraudster, formalises the main types and subtypes of known fraud, and presents the nature of data evidence collected within affected industries. Within the business context of mining the data to achieve higher cost savings, this research presents methods and techniques together with their problems. Compared to all related reviews on fraud detection, this survey covers much more technical articles and is the only one, to the best of our knowledge, which proposes alternative data and solutions from related domains.Comment: 14 page

Fraud Detection in Telecommunications Industry: Bridging the Gap with Random Rough Subspace Based Neural Network Ensemble Method

Fraud has been very common in the society and it affects private enterprises as well as public entities. Telecommunication companies worldwide suffer from customers who use the provided services without paying. There are also different types of telecommunication fraud such as subscription fraud, clip on fraud, call forwarding, cloning fraud, roaming fraud and calling card fraud. Thus, detection and prevention of these frauds are the main targets of the telecommunication industry. This paper addresses the various techniques of detecting fraud, giving the limitations of each technique and proposes random rough subspace-based neural network ensemble method for effective fraud detection. Keywords: Fraud, Fraud detection, Random rough subspace, Neural network, Telecommunication

Comparing Data Mining Classification Algorithms in Detection of Simbox Fraud

Fraud detection in telecommunication industry has been a major challenge. Various fraud management systems are being used in the industry to detect and prevent increasingly sophisticated fraud activities. However, such systems are rule-based and require a continuous monitoring by subject matter experts. Once a fraudster changes its fraudulent behavior, a modification to the rules is required. Sometimes, the modification involves building a whole new set of rules from scratch, which is a toilsome task that may by repeated many times. In recent years, datamining techniques have gained popularity in fraud detection in telecommunication industry. Unlike rule based Simbox detection, data mining algorithms are able to detect fraud cases when there is no exact match with a predefined fraud pattern, this comes from the fuzziness and the statistical nature that is built into the data mining algorithms. To better understand the performance of data mining algorithms in fraud detection, this paper conducts comparisons among four major algorithms: Boosted Trees Classifier, Support Vector Machines, Logistic Classifier, and Neural Networks. Results of the work show that Boosted Trees and Logistic Classifiers performed the best among the four algorithms with a false-positive ratio less than 1%. Support Vector Machines performed almost like Boosted Trees and Logistic Classifier, but with a higher false-positive ratio of 8%. Neural Networks had an accuracy rate of 60% with a false positive ratio of 40%. The conclusion is that Boosted Trees and Support Vector Machines classifiers are among the better algorithms to be used in the Simbox fraud detections because of their high accuracy and low false-positive ratios

Empirical analysis of ensemble methods for the classification of robocalls in telecommunications

With the advent of technology, there has been an excessive use of cellular phones. Cellular phones have made life convenient in our society. However, individuals and groups have subverted the telecommunication devices to deceive unwary victims. Robocalls are quite prevalent these days and they can either be legal or used by scammers to trick one out of their money. The proposed methodology in the paper is to experiment two ensemble models on the dataset acquired from the Federal Trade Commission(DNC Dataset). It is imperative to analyze the call records and based on the patterns the calls can classify as a robocall or not a robocall. Two algorithms Random Forest and XgBoost are combined in two ways and compared in the paper in terms of accuracy, sensitivity and the time taken

FRAUD PREVENTION AND DETECTION SYSTEM IN NIGERIA BANKING INDUSTRIES

Fraud is on the rise as a result of the advent of modern technology and the global superhighways of banking transactions, resulting in billions of dollars in losses worldwide each year. Although fraud prevention technologies are the most effective method of combating fraud, fraudsters are flexible and will usually find a way around them over time. We need fraud detection approaches if we are to catch fraudsters after fraud prevention has failed. Statistics and machine learning are effective fraud detection technologies that have been used to detect money laundering, e-commerce credit card fraud, telecommunications fraud, and computer intrusion, to name a few. The program is simple to use, and anyone with permission can use it. The importance of computer technology has expanded as it has advanced in all areas of human endeavor.                        Keywords: Fraud Detection, Fraud Prevention, Banking Industries, Telecommunications

Critical success factors for preventing E-banking fraud

E-Banking fraud is an issue being experienced globally and is continuing to prove costly to both banks and customers. Frauds in e-banking services occur as a result of various compromises in security ranging from weak authentication systems to insufficient internal controls. Lack of research in this area is problematic for practitioners so there is need to conduct research to help improve security and prevent stakeholders from losing confidence in the system. The purpose of this paper is to understand factors that could be critical in strengthening fraud prevention systems in electronic banking. The paper reviews relevant literatures to help identify potential critical success factors of frauds prevention in e-banking. Our findings show that beyond technology, there are other factors that need to be considered such as internal controls, customer education and staff education etc. These findings will help assist banks and regulators with information on specific areas that should be addressed to build on their existing fraud prevention systems