Implementation of Credit Card Fraud Detection System with Concept Drifts Adaptation

Abstract

There is a large number of credit card payments take place that is targeted by fraudulent activities. Companies which are responsible for the processing of electronic transactions need to efficiently detect the fraudulent activity to maintain customers’ trust and the continuity of their own business. In this paper, the developed algorithm detects credit card fraud. Prediction of any algorithm is based on certain attribute like customer’s buying behavior, a network of merchants that customer usually deals with, the location of the transaction, amount of transaction, etc. But these attribute changes over time. So, the algorithmic model needs to be updated periodically to reduce this kind of errors. Proposed System provides two solutions for handling concept drift. One is an Active solution and another one is Passive. Active solution refers to triggering mechanisms by explicitly detecting a change in statistics. Passive solution suggests updating the model continuously in order to consider newly added records. The proposed and developed system filters 80% fraudulent transactions and acts as a support system for the society at a large.