Document Type : Applied Article

Authors

• Mohamad Mahdi Yadegar ¹
• Hossein Rahmani ²

¹ Computer Engineering, Iran University of Science and Technology, Tehran, Iran

² School of Computer engineering, Iran University of Science and Technology, Tehran, Iran.

Abstract

In recent years, new technologies have brought new innovations into the financial and commercial world, giving fraudsters many ways to commit fraud and cost companies big time. We can build systems that detect fraudulent patterns and prevent future incidents using advanced technologies. Machine learning algorithms are being used more for fraud detection in financial data. But the common challenge is the imbalance of the dataset which hinders traditional machine learning methods. Finding the best approach towards these imbalance datasets is the problem many of the researchers are facing when trying to use machine learning methods. In this paper, we propose the method called FinFD-GCN that use Graph Convolutional Networks (GCNs) for fraud detection in credit card transaction datasets. FinFD-GCN represents transactions as graph in which each node represents a transaction and each edge represents similarity between transactions. By using this graph representation FinFD-GCN can capture complex relationships and anomalies that may have been overlooked by traditional methods or were even impossible to detect with conventional approaches, thus enhancing the accuracy and robustness of fraud detection in financial data. We use common evaluation metrics and confusion matrices to evaluate the proposed method. FinFD-GCN achieves significant improvements in recall and AUC compared to traditional methods such as logistic regression, support vector machines, and random forests, making it a robust solution for credit card fraud detection. By using the GCN model for fraud detection in this credit card dataset we outperformed base models 5% and 10%, with respect to F1 and AUC, respectively.

Keywords

• Fraud detection
• Machine learning
• Graph convolutional networks
• graph representation
• node classification

Main Subjects

• H.3. Artificial Intelligence