191 - 197 - Detection of Transaction Fraud Using Deep Learning

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The paper discusses detecting transaction fraud using deep learning during the COVID-19 pandemic.

The paper proposes detecting fraud in online transactions during COVID-19 by analyzing customer transaction patterns and applying machine learning models.

The paper proposes using a recurrent neural network model for fraud detection by training it on customer transaction data attributes.

Detection of Transaction Fraud Using Deep Learning

Made by

Name-Adrineel Saha
Enrollment no-12019002003114
Sec-C
Roll no-191
Year-3rd

Partner’s Name-Ayush Kumar Jha


Enrollment no-12019002007020
Sec-C
Roll no-197
Year-3rd

Under the supervision of


Prof. Bavrabi Ghosh
Contents
1) Abstract
2) Introduction
3) Motivation for doing this project
4) Literature Survey
5) Dataset Used
6) Proposed Methodology
7) Implementation
8) Future Scope
9) Conclusion
10) References
Abstract
Online transactions are becoming more popular in present situation where
the globe is facing an unknown disease COVID-19. Now authorities of
Countries requested peoples to use cashless transaction as far as
possible. Practically it is not always possible to use it in all transactions.
Since number of such cashless transactions have been increasing during
lockdown period due to COVID-19, fraudulent transactions are also
increasing in a rapid way. Fraud can be analyzed by viewing a series of
customer transactions data that was done in his/her previous transactions.
For detection of fraud during COVID-19, banks and credit card companies
are applying various methods such as data mining , decision tree, rule
based mining, neural network, fuzzy clustering approach and machine
learning methods. These approaches is to try to find out normal usage
pattern of customers based on their past activities. The objective of this
project is to find out such fraud transactions during such unmanageable
situation.
Introduction
Fraud detection is an emerging problem during the present situation when
coronavirus has been spreading throughout the world. The extensive availability of
uncontrolled consumer communication channels (e.g., internet, mobile banking,
telephone banking etc.), the challenge of controlling fraud has been increased
substantially. In online purchases, the customer frequently used online transactions
very often. A significant increase in the volume of electronic transactions mainly due to
the popularization of World Wide Web as well as for COVID-19. The reason is lockdown
due to high mortality of humans for the disease. The latest technological
inventions are also facing problems of hacking user accounts easily.
The preference for E-commerce websites for purchasing various products at a more
economic or reasonable price have a positive impact on growth of the target market.
Mobile payment system facilitate nearly any type of payments. Most merchants prefer
online system of operations for online shopping during COVID-19. Any payment can
be made if a person has online transaction facility and has mobile. Mobile is required for
receiving One Time Password (OTP). Mobile wallets helps to increase the overall use of
mobile payment. It is found that mobile payments have reached $194.1 billion in 2017 and
$30.2 billion in 2017 as compared to $18.7 billion in 2016 . The market using global
mobile wallet is expected to value at more than $0.5 billion in 2019. During COVID-19,
it is definitely increased more due to lockdown faced by most of the peoples in the globe.
Motivation for doing this project
The objective of this project is to establish an effective and accurate
fraudulent financial transaction detection model with high efficiency and
low error rate. It utilizes Deep Learning (DL) techniques for implementing
this model. These techniques are beneficial since it automatically captures
hierarchical features present in the financial dataset. Recurrent Neural
Network (RNN) follows DL architecture which is utilized in this project.
Automatic recognising of suspicious activities that trigger illegal attempts
will alarm the customers so that economic loss can be prevented. Analysis
of the proposed algorithms includes determination of quantitative,
qualitative, comparative and complexity measures. The proposed methods
have been rigorously tested using dataset.
Literature Survey
Altab Althar Taha and Sareef Jameel Malbery described that up-gradation in e-commerce and communication
technology have made credit card usage more popular way of payment and the fraud associated with transactions is
also increasing. They have used the optimized light gradient boosting machine, where Bayesian based hyper-parameter
optimization are combined to tune with parameter of light gradient boosting machine (Light GBM). In this approach they
used two set of real world public dataset consisting of fraudulent and non-fraudulent transactions. Based on the
comparison with other techniques, their proposed system outperformed in terms of accuracy. The proposed system
produces the accuracy of 98.40%, area under receiver operating characteristics curve (AUC) of 92.88%, Precision of
97.34% and F1-score of 56.95% [1].

S. Makki, Z. Assaghir, Y. Taher, R. Haque, M. Hacid and H. Zeineddine research describes that the credit card fraud
cause huge financial loss. Most of the researchers have been working on this to provide an innovative ways to eradicate
this loss and most of the available methods are costly, time consuming and labor incentive task. The authors have
found out that the imbalanced classification of dataset is the main reason for the inaccurate results after many
experimental studies. These imbalance classifications consist of un-balanced dataset, which caused the model to
predict inaccurate and causes the financial loss. Therefore, they have found that LR, C5.0 decision tree algorithm, SVM
and ANN are best algorithm based on accuracy, AUCPR and sensitivity. They have used the balanced dataset in order to
train these models [2].

Debachudamani Prusti and Santhnu Kumar Rath designed an application with applied machine learning approaches
such as Decision tree (DT), k-nearest algorithm (kNN), Extreme learning machine (ELM), Multilayer perceptron (MLP)
and support vector machine (SVM) to detect the accuracy in fraud identification. They proposed a model by hybridizing
the DT, SVM and kNN techniques. They used two web-based protocols such as simple object access protocol (SOAP)
and Representational state transfer (REST) for efficient exchange of data across multiple heterogeneous platforms.
They compared five machine learning algorithm results based on accuracy metric. SVM performed better than other
algorithms by 81.63% but the hybrid system proposed by them had higher accuracy of 82.58% [3].
In Chouiekha and El Haj’s paper [4], Convolutional Neural Networks (CNN) are used for
Fraud Detection. A database was created with 18000 artificial images of 300
customers’ activity during 60 days. They used Customer Details Records in such a way
that long conversation or an unusual number of vouchers used would be detected. CNN
is applied to the images to detect fraudulent activity. 50% of the data set was used for
training, 25% for validation and 25% of for testing. Images have been rescaled to
improve classifier performance. The proposed Deep CNN(DCNN) contained 7 layers with
3 Convolutional layers, 2 pooling layers, 1 full connected layer and finally 1 SoftMax
regression layer. Results were evaluated using accuracy. Deep CNN’s performance is
compared against SVM, Random Forest and Gradient Boosting Classifier (GBC). The
results show that DCNN outperforms SVM by 5%, Random Forest by 10% and GBC by
3%. Deep CNN was found to train almost twice faster than the rest of the methods.

Tom Sweers in his bachelor thesis, [5] describes AutoEncoders as an effective neural
network which can encode the data as it would learn to decode it as well. In this
approach the Autoencoders are trained to non-anomaly points, introduced to the
anomaly points to classify it as ‘fraud’ or ‘no fraud’ according to the reconstruction
error which is expected to be high in the case of anomalies that the system has not
been trained on. Here, any value above the upper bound value or threshold could be
considered an anomaly.
Dataset Used
Financial dataset simulated by PaySim that identifies mobile money
transactions based on a sample of real transactions . These
transactions are collected from one month financial logs of a mobile
money service . The dataset consists of 6362620 online transaction
records during COVID-19 and each record is formulated as a collection
of several attributes. The non-numeric data present in the dataset is
transformed into numeric data. Next, all the numeric data are scaled
down into a specific range from 0 to 1. This will help in pre-processing
dataset on which proposed classifier is applied. Cash-out and transfer
type transactions are having suspicious transaction set.The attribute
‘isFraud’ is kept as target variable of classification procedure.
Proposed Methodology
The aim of the paper is to detect suspicious activities of money transaction
during COVID-19. A classifier model associates input data into output classes
after learning from training data. A stacked RNN based model is proposed as
classifier model that identifies transactions that may have deceptive issues.
Multiple RNN layers are stacked into a single platform for obtaining the
proposed model. Four simple RNN layers along with four dropout layers are
incorporated into a sequential model. Initially neural network models are
configured and training process is started. The training process goes through
one cycle and it is known as an epoch. During this period the dataset is
partitioned into smaller sections. Finally, iterative process is executed over a
couple of batch size as a subsections of training dataset for completing epoch
execution . This entire process is inclined towards solving binary classification
problem so binary cross entropy function is used as training criterion.
Implementation
Import Libraries:-
Numpy
Pandas
Matplotlib
Seaborn
Warnings
Sklearn
Inflection
Joblib
Scipy
Tensorflow

Load Dataset:-
fraud_0.1origbase.csv
Exploring Datset and descbibe numerical attributes:-
Check Data Type of the Features and missing values:-
Exploring all types of data by Plotting:-
Univariate Analysis
Numerical Variables
Categorical Variables
Bivariate Analysis
The majority fraud transaction occours for the same user
All the fraud amount is 60% of fraud transaction occours using cash-out-type
greater than 10.000. method
Values greater than 100.000
occurs using transfers-type method. Fraud transactions occours at least in 3 days
Multivariate Analysis
Machine Learning Modeling
Baseline Logistic Regression K nearest Neighbours
Comparing Model Performance
Hyperparameter Fine Tuning
Training Process of RNN
Final Model
Future Scope
1) Wewill be incorporating a website implementation for the
model deployment.
Conclusion
Due to increasing demand of mobile money transfer, it is necessary
to discover fraud activities during transactions. This is now
inevitable during COVID-19. Discovering illegal attempts will prevent
the customers to be harassed from financial dispute. The study has
been made from the announcement of Covid-19 to first unlock period
announced by the Government. The main aim of the to minimize
fraud as far as possible. It shows that the method is practical and is
highly suitable for implementation at the present scenario. This
proposed method is favourable because of its applicability on large
financial dataset. An efficient and low error system is required in
the field of mobile transaction since it will notify the customers by
triggering deceptive transactions.
References
[1]A.A. Taha, S.J. Malebary.“An intelligent approach to credit card fraud detection using an optimized light
gradient boosting machine”. IEEE Access, 8 (2020), pp. 25579-25587, 10.1109/ACCESS.2020.2971354

[2] S. Makki, Z. Assaghir, Y. Taher, R. Haque, M. Hacid, H. Zeineddine. “An experimental study with
imbalanced classification approaches for credit card fraud detection”.IEEE Access, 7 (2019), pp. 93010-
93022,10.1109/ACCESS.2019.2927266

[3] D. Prusti, S.K. Rath.“Web service based credit card fraud detection by applying machine learning
techniques”.Proceedings of the TENCON 2019 - 2019 IEEE Region 10 Conference (TENCON), Kochi, India
(2019), pp. 492-497,10.1109/TENCON.2019.8929372

[4] Alae Chouiekha, EL Hassane Ibn EL Haj. “ConvNets for Fraud Detection analysis”. Procedia Computer
Science 127, pp.133–138.2018.

[5] Tom Sweers. “Autoencoding Credit Card Fraud”. Bachelor Thesis, Radboud University. June 2018.

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