An Adaptive Heterogeneous Ensemble Learning Model for Credit Card Fraud Detection

An Adaptive Heterogeneous Ensemble Learning Model for Credit Card Fraud Detection

Volume 9, Issue 3, Page No 01-11, 2024

Author’s Name: Tinofirei Museba1,a), Koenraad Vanhoof2

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1 Department of Information Systems, College of Business and Economics, University of Johannesburg, Johannesburg, 2006, South Africa
2 Department of Quantitative Methods, Universiteit Hasselt, Campus Diepenbeek, Diepenbeek, Kantoor B10, Belgium

a)whom correspondence should be addressed. E-mail: tmuseba@uj.ac.za

Adv. Sci. Technol. Eng. Syst. J. 9(3), 1-11(2024); a  DOI: 10.25046/aj090301

Keywords: Credit Card Fraud, Machine learning, Concept drift, Ensemble selection, Class imbalance

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Abstract

The proliferation of internet economies has given the corporate world manifold advantages to businesses, as they can now incorporate the latest innovations into their operations, thereby enhancing ease of doing business. For instance, financial institutions have leveraged credit card usage on the aforesaid proliferation. However, this exposes clients to cybercrime, as fraudsters always find ways to breach security measures and access customers’ confidential information, which they then use to make fraudulent credit card transactions. As a result, financial institutions incur huge losses amounting to billions of United States dollars. To avert such losses, it is important to design efficient credit card fraud detection algorithms capable of generating accurate alerts. Recently, machine learning algorithms such as ensemble classifiers have emerged as the most effective and efficient algorithms in an effort to assist fraud investigators. There are many factors that hinder the financial sector from designing machine learning algorithms that can efficiently and effectively detect credit card fraud. Such factors include the non-stationarity of data related to concept drift. In addition, class distributions are extremely imbalanced, while there is scant information on transactions that would have been flagged by fraud investigators. This can be attributed to the fact that, owing to confidentiality regulations, it is difficult to access public data. In this article, the author designs and assesses a credit card fraud detection system that can adapt to the changes in data distribution and generate accurate alerts.

Received: 15 December 2023, Revised: 22 February 2024, Accepted: 23 February 2024, Published Online: 16 May, 2024

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