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Cognitive Computing for Big Data Systems Over IoT pp 79–95Cite as

Cognitive Data Science Automatic Fraud Detection Solution, Based on Benford’S Law, Fuzzy Logic with Elements of Machine Learning

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Part of the book series: Lecture Notes on Data Engineering and Communications Technologies ((LNDECT,volume 14 ))

Abstract

Developing fraud detection models always has been challenging area. Low frequency of fraudulent cases within data, indications instead of certainty contribute to very challenging area for data science method applying. Traditional approach of predictive modelling became insufficient, because relaying on few variables as a base of the fraud model are very fragile concept. Reason for that is fact that we are talking about portfolio with low cases of events, and from the other hand it is unrealistic to lean on few variables articulated through logistic regression, neural network or similar method that will be able to detect sophisticated try of fraudulent activities. Chapter gives proposal how to use data science in such situations where there are no solid bases but only potential suspicious regarding fraudulent activities. For those purposes Benford’s law in combination with other data science methods and fuzzy logic will be used on sample data set, and will be shown potentials of proposed methodology for fraud detection purposes. Chapter shows case study in domain of finance on public data, where proposed methodology will be illustrated an efficient methodology which can be usable for fraud detection purposes.

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Author information

Authors and Affiliations

  1. Raiffeisen Bank Austria, Magazinska 69, Zagreb, Croatia

    Goran Klepac

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  1. Goran Klepac
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Correspondence to Goran Klepac .

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Editors and Affiliations

  1. School of Computing Science and Engineering, VIT University, Vellore, Tamil Nadu, India

    Arun Kumar Sangaiah

  2. School of Computing Science and Engineering, VIT University, Vellore, Tamil Nadu, India

    Arunkumar Thangavelu

  3. Department of Computer Science and Engineering, National Institute of Technology, Surathkal, Mangalore, Karnataka, India

    Venkatesan Meenakshi Sundaram

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Klepac, G. (2018). Cognitive Data Science Automatic Fraud Detection Solution, Based on Benford’S Law, Fuzzy Logic with Elements of Machine Learning. In: Sangaiah, A., Thangavelu, A., Meenakshi Sundaram, V. (eds) Cognitive Computing for Big Data Systems Over IoT. Lecture Notes on Data Engineering and Communications Technologies, vol 14 . Springer, Cham. https://doi.org/10.1007/978-3-319-70688-7_4

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  • DOI: https://doi.org/10.1007/978-3-319-70688-7_4

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-70687-0

  • Online ISBN: 978-3-319-70688-7

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