scholarly journals The accuracy versus interpretability trade-off in fraud detection model

Data & Policy ◽  
2021 ◽  
Vol 3 ◽  
Author(s):  
Anna Nesvijevskaia ◽  
Sophie Ouillade ◽  
Pauline Guilmin ◽  
Jean-Daniel Zucker
Keyword(s):  
Machine Learning ◽  
Concept Drift ◽  
Fraud Detection ◽  
Learning Approaches ◽  
Policy Makers ◽  
Trade Off ◽  
Detection Model ◽  
Hybrid Approaches ◽  
Interpretable Models ◽  
Post Hoc

Abstract Like a hydra, fraudsters adapt and circumvent increasingly sophisticated barriers erected by public or private institutions. Among these institutions, banks must quickly take measures to avoid losses while guaranteeing the satisfaction of law-abiding customers. Facing an expanding flow of operations, effective banking relies on data analytics to support established risk control processes, but also on a better understanding of the underlying fraud mechanism. In addition, fraud being a criminal offence, the evidential aspect of the process must also be considered. These legal, operational, and strategic constraints lead to compromises on the means to be implemented for fraud management. This paper first focuses on the translation of practical questions raised in the banking industry at each step of the fraud management process into performance evaluation required to design a fraud detection model. Secondly, it considers a range of machine learning approaches that address these specificities: the imbalance between fraudulent and nonfraudulent operations, the lack of fully trusted labels, the concept-drift phenomenon, and the unavoidable trade-off between accuracy and interpretability of detection. This state-of-the-art review sheds some light on a technology race between black box machine learning models improved by post-hoc interpretation and intrinsic interpretable models boosted to gain accuracy. Finally, it discusses how concrete and promising hybrid approaches can provide pragmatic, short-term answers to banks and policy makers without swallowing up stakeholders with economical and ethical stakes in this technological race.

scholarly journals Emerging Approach for Detection of Financial Frauds Using Machine Learning

2021 ◽  
pp. 9-22
Author(s):  
Upasana Mukherjee ◽  
Vandana Thakkar ◽  
Shawni Dutta ◽  
Utsab Mukherjee ◽  
Samir Kumar Bandyopadhyay
Keyword(s):  
Machine Learning ◽  
Random Forest ◽  
Decision Tree ◽  
Credit Card ◽  
Fraud Detection ◽  
Loan Default ◽  
Credit Card Fraud ◽  
Detection Model ◽  
Default Prediction ◽  
Automated Process

The growth of regularly generated data from many financial activities has significant implications for every corner of financial modelling. This study has investigated the utilization of these continuous growing data by a means of an automated process. The automated process can be developed by using Machine learning based techniques that analyze the data and gain experience from the underlying data. Different important domains of financial fields such as Credit card fraud detection, bankruptcy detection, loan default prediction, investment prediction, marketing and many more can be modelled by implementing machine learning methods. Among several machine learning based techniques, the use of parametric and non-parametric based methods are approached by this research. Two parametric models namely Logistic Regression, Gaussian Naive Bayes models and two non-parametric methods such as Random Forest, Decision Tree are implemented in this paper. All the mentioned models are developed and implemented in the field of Credit card fraud detection, bankruptcy detection, loan default prediction. In each of the aforementioned cases, the comparative study among the classification techniques is drawn and the best model is identified. The performance of each classifier on each considered domain is evaluated by various performance metrics such as accuracy, F1-score and mean squared error. In the credit card fraud detection model the decision tree classifier performs the best with an accuracy of 99.1% and, in the loan default prediction and bankruptcy detection model, the random forest classifier gives the best accuracy of  97% and 96.84% respectively.

scholarly journals Machine Learning Approaches for Credit Card Fraud Detection

2018 ◽  
Vol 7 (2) ◽  
pp. 917
Author(s):  
S Venkata Suryanarayana ◽  
G N. Balaji ◽  
G Venkateswara Rao
Keyword(s):  
Machine Learning ◽  
Logistic Regression ◽  
Language Processing ◽  
Credit Card ◽  
Fraud Detection ◽  
Machine Learning Techniques ◽  
Learning Approaches ◽  
Credit Card Fraud ◽  
Public Data ◽  
The Impact

With the extensive use of credit cards, fraud appears as a major issue in the credit card business. It is hard to have some figures on the impact of fraud, since companies and banks do not like to disclose the amount of losses due to frauds. At the same time, public data are scarcely available for confidentiality issues, leaving unanswered many questions about what is the best strategy. Another problem in credit-card fraud loss estimation is that we can measure the loss of only those frauds that have been detected, and it is not possible to assess the size of unreported/undetected frauds. Fraud patterns are changing rapidly where fraud detection needs to be re-evaluated from a reactive to a proactive approach. In recent years, machine learning has gained lot of popularity in image analysis, natural language processing and speech recognition. In this regard, implementation of efficient fraud detection algorithms using machine-learning techniques is key for reducing these losses, and to assist fraud investigators. In this paper logistic regression, based machine learning approach is utilized to detect credit card fraud. The results show logistic regression based approaches outperforms with the highest accuracy and it can be effectively used for fraud investigators.  

scholarly journals Fraud Detection in E-Commerce Using Machine Learning

2021 ◽  
Vol 10 (3) ◽  
pp. 2206-2211
Keyword(s):  
Machine Learning ◽  
Fraud Detection ◽  
Support Vector ◽  
Learning Approaches ◽  
Web Based ◽  
Online Retail ◽  
Retail Outlets ◽  
N Gram ◽  
Is Design ◽  
Business Site

Customers rely heavily on decisions to purchase products either on commerce sites or in online retail outlets. Since these reviews are the game changers for success or failure in product marketing, reviews are used for positive or negative ideas. Improper reviews may also be referred to as false / fraudulent reviews or spam comments or false reviews. To downgrade or advance the item, resentful audits or phony surveys, which are tricky, are posted in the web-based business site. This outcome will prompt possible monetary misfortunes or bigger measure of development in business.So, the proposed system is design and developed in such way that it will detect fake, false and spam reviews for fraud detection using machine learning approaches like Sentiment Analysis, Support Vector Machine (SVM), Decision Tree algorithm, and N-gram model

scholarly journals Tuning the False Positive Rate / False Negative Rate with Phishing Detection Models

2019 ◽  
Vol 9 (1S5) ◽  
pp. 7-13
Keyword(s):  
Machine Learning ◽  
Neural Networks ◽  
False Positive Rate ◽  
False Negative ◽  
False Negative Rate ◽  
Trade Off ◽  
Detection Model ◽  
Phishing Attacks ◽  
Positive Rate ◽  
Phishing Detection

Phishing attacks have risen by 209% in the last 10 years according to the Anti Phishing Working Group (APWG) statistics [19]. Machine learning is commonly used to detect phishing attacks. Researchers have traditionally judged phishing detection models with either accuracy or F1-scores, however in this paper we argue that a single metric alone will never correlate to a successful deployment of machine learning phishing detection model. This is because every machine learning model will have an inherent trade-off between it’s False Positive Rate (FPR) and False Negative Rate (FNR). Tuning the trade-off is important since a higher or lower FPR/FNR will impact the user acceptance rate of any deployment of a phishing detection model. When models have high FPR, they tend to block users from accessing legitimate webpages, whereas a model with a high FNR will allow the users to inadvertently access phishing webpages. Either one of these extremes may cause a user base to either complain (due to blocked pages) or fall victim to phishing attacks. Depending on the security needs of a deployment (secure vs relaxed setting) phishing detection models should be tuned accordingly. In this paper, we demonstrate two effective techniques to tune the trade-off between FPR and FNR: varying the class distribution of the training data and adjusting the probabilistic prediction threshold. We demonstrate both techniques using a data set of 50,000 phishing and 50,000 legitimate sites to perform all experiments using three common machine learning algorithms for example, Random Forest, Logistic Regression, and Neural Networks. Using our techniques we are able to regulate a model’s FPR/FNR. We observed that among the three algorithms we used, Neural Networks performed best; resulting in an higher F1-score of 0.98 with corresponding FPR/FNR values of 0.0003 and 0.0198 respectively.

scholarly journals EXPLAIN IT TO ME – FACING REMOTE SENSING CHALLENGES IN THE BIO- AND GEOSCIENCES WITH EXPLAINABLE MACHINE LEARNING

2020 ◽  
Vol V-3-2020 ◽  
pp. 817-824
Author(s):  
R. Roscher ◽  
B. Bohn ◽  
M. F. Duarte ◽  
J. Garcke
Keyword(s):  
Machine Learning ◽  
Remote Sensing ◽  
Neural Networks ◽  
Simulated Data ◽  
High Accuracy ◽  
Learning Approaches ◽  
Learning Methods ◽  
Machine Learning Methods ◽  
Recent Advances ◽  
Post Hoc

Abstract. For some time now, machine learning methods have been indispensable in many application areas. Especially with the recent development of efficient neural networks, these methods are increasingly used in the sciences to obtain scientific outcomes from observational or simulated data. Besides a high accuracy, a desired goal is to learn explainable models. In order to reach this goal and obtain explanation, knowledge from the respective domain is necessary, which can be integrated into the model or applied post-hoc. We discuss explainable machine learning approaches which are used to tackle common challenges in the bio- and geosciences, such as limited amount of labeled data or the provision of reliable and scientific consistent results. We show that recent advances in machine learning to enhance transparency, interpretability, and explainability are helpful in overcoming these challenges.

scholarly journals A lifelong spam emails classification model

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rami Mustafa A. Mohammad
Keyword(s):  
Machine Learning ◽  
Data Mining ◽  
Positive Impact ◽  
Concept Drift ◽  
Classification Model ◽  
Learning Approaches ◽  
Suggested Model ◽  
Sound Classification ◽  
Internet Users ◽  
Using Data

Spam emails classification using data mining and machine learning approaches has enticed the researchers' attention duo to its obvious positive impact in protecting internet users. Several features can be used for creating data mining and machine learning based spam classification models. Yet, spammers know that the longer they will use the same set of features for tricking email users the more probably the anti-spam parties might develop tools for combating this kind of annoying email messages. Spammers, so, adapt by continuously reforming the group of features utilized for composing spam emails. For that reason, even though traditional classification methods possess sound classification results, they were ineffective for lifelong classification of spam emails duo to the fact that they might be prone to the so-called “Concept Drift”. In the current study, an enhanced model is proposed for ensuring lifelong spam classification model. For the evaluation purposes, the overall performance of the suggested model is contrasted against various other stream mining classification techniques. The results proved the success of the suggested model as a lifelong spam emails classification method.

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