Machine Learning for the Detection and Prevention of Credit Card Fraud
Financial institutions (including banks, insurance brokers, investment companies, etc.) are obliged to guarantee the highest level of security and protection against (an increasing) range of methods criminals use to commit financial crime. The UK Payment Services Regulations, for debit cards, state that the most you should have to pay is the first £35 of an unauthorised transaction if the bank has reason to believe you should've been aware that your payment details were lost or stolen. Your bank can only refuse to refund you if it has evidence that you acted fraudulently, or with 'gross negligence'. If a fraud occurs on your credit card or a credit facility, the UK Consumer Credit Act takes precedence. Thus, any accusation of 'gross negligence' on the part of the consumer doesn't arise in this act unless your card provider can demonstrate that you authorised the payment. Consequently it stands to reason that banks and financial institutions are especially interested in preventing bank fraud! In this article I'll look at the role machine learning can play in preventing credit card frauds - while also considering some of the specific challenges this domain presents.