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Fraud Detection ML Research Paper

This study presents a machine learning framework for detecting online payment fraud, evaluating various classification algorithms including Gradient Boosting, which achieved the highest accuracy of 99.7%. The research highlights the inadequacy of traditional rule-based systems against evolving fraud tactics and emphasizes the effectiveness of machine learning in identifying fraudulent transactions. Future research may focus on deep learning and real-time processing to enhance fraud detection capabilities.

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2 views3 pages

Fraud Detection ML Research Paper

This study presents a machine learning framework for detecting online payment fraud, evaluating various classification algorithms including Gradient Boosting, which achieved the highest accuracy of 99.7%. The research highlights the inadequacy of traditional rule-based systems against evolving fraud tactics and emphasizes the effectiveness of machine learning in identifying fraudulent transactions. Future research may focus on deep learning and real-time processing to enhance fraud detection capabilities.

Uploaded by

harshitmishra5971
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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A Machine Learning Framework for Detecting Online Payment Fraud:

A Comparative Approach

Author: [Your Name]

Institution: [Your Institution]

Abstract
With the rise of e-commerce, online payment fraud has become a critical concern for financial

institutions and consumers alike. This study proposes a machine learning-based framework to

detect fraudulent transactions using a range of classification algorithms. We evaluated models such

as Gradient Boosting, Logistic Regression, Random Forest, K-Nearest Neighbors (KNN), Naïve

Bayes, and Neural Networks on multiple datasets. Among these, Gradient Boosting demonstrated

superior performance with an accuracy of 99.7%, establishing its robustness across different

validation settings. These results affirm the efficacy of machine learning in real-time fraud detection.

Keywords: Fraud detection, machine learning, e-commerce, online payments, Gradient Boosting,

classification algorithms

1. Introduction
Online transactions are increasingly targeted by fraudsters employing sophisticated techniques to

exploit system vulnerabilities. Fraudulent activities include identity theft, transaction manipulation,

phishing attacks, and social engineering tactics. Conventional rule-based systems are often

insufficient to keep up with evolving threats, necessitating the use of machine learning (ML) models

that can adaptively identify anomalous behaviors in financial data.

ML enables the automation of fraud detection by learning from historical data and recognizing

complex patterns indicative of fraudulent behavior. This paper explores the application of various ML

algorithms to detect fraudulent online payments.


2. Related Work
Numerous studies have leveraged machine learning for fraud detection. Decision tree models have

shown high accuracy and interpretability. Recent works also emphasize the use of ensemble

methods like Random Forest and Gradient Boosting due to their robustness and high recall rates.

Comparative studies have revealed that Gradient Boosting often outperforms other models in

precision and recall, especially in highly imbalanced datasets typical of fraud scenarios.

3. Methodology
3.1 Dataset Description

We used publicly available financial transaction datasets containing features such as transaction

type, amount, origin and destination accounts, and pre/post transaction balances. Each record

includes a binary label indicating whether the transaction was fraudulent.

3.2 Algorithms Used

Gradient Boosting, Random Forest, Logistic Regression, K-Nearest Neighbors (KNN), Naïve Bayes,

Neural Network.

3.3 Evaluation Metrics

Accuracy, Precision, Recall, F1 Score, AUC, Matthews Correlation Coefficient (MCC).

4. Experimental Results
Our experiments revealed that Gradient Boosting achieved the highest accuracy (99.7%) and

balanced performance across all metrics. Random Forest followed closely with a 99.6% accuracy.

Naïve Bayes and KNN had lower precision, indicating a higher false positive rate. Neural Networks

performed well but required more computation.

5. Conclusion
Machine learning presents a dynamic and effective approach to combatting online payment fraud.
Ensemble methods, particularly Gradient Boosting, offer superior detection capabilities. Future work

may involve deep learning architectures, real-time processing, and enhancing interpretability to

foster trust in AI systems.

References
1. Author A, Author B. Title. Journal Name, Year.

2. Author C, Author D. Title. Conference Name, Year.

3. Dataset Source: [Link]

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