SCMS School of Engineering &Technology

Department of Computer Science and Engineering

Title: Credit Card Fraud Detection System

Guide: Goup Members:

Dr. Anu V.R. Aromal Sudhi [SCM20CS034]
Associate Professor Albin Stanly [SCM20CS010]
Department of CSE Abhimanue R [SCM20CS004]
SSET Anandanarayan J [SCM20CS024]
Table of Content

• Introduction
• Literature Review
• Implementation
• Diagrams
• Results
• Conclusion
• References
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Introduction
Credit card fraud is a pervasive issue in the digital age, posing significant challenges to financial
institutions and cardholders worldwide. There is a growing need for advanced fraud detection
systems that can effectively identify and mitigate fraudulent transactions.
 Fraud Guard is a credit card fraud detection and alerting system designed to address this need. It
leverages cutting-edge machine learning techniques to analyze transaction data in real-time and
detect patterns and anomalies indicative of fraud. Instant alerts via SMS and email when suspicious
activity is detected. Detailed reports and analytics for financial institutions to enhance their fraud
prevention strategies.
 Highly scalable and adaptable architecture suitable for financial institutions of all sizes. Core
components include data ingestion, fraud detection, and alerting, utilizing algorithm like Random
Forest for fraud detection. This interface enables fraud analysts to quickly review and respond to
potential fraud cases, enhancing overall efficiency
It uses a combination of supervised learning algorithms, such as Random Forest and Support
Vector Machine, to classify transactions as fraudulent or non-fraudulent.The program can be easily
integrated into existing banking systems, allowing for seamless deployment and operation..
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 Literature Review
Sl No Journal Name Paper Title Authors Month & Year ISSN/ Page No
Issue/Vo
lume

1. IEEE TRANSACTIONS ON Credit Card Ruttala SailushaV JANUARY-

Fraud Detection Velagapudi Ramakrishna MARCH 2022
FRAUD DETECTION Using Machine
R. Ramesh
Learning
G. Ramakoteswara Rao

2. International Research Journal A Research BORA MEHAR SRI SATYA October 15,
Paper on Credit TEJA1, BOOMIREDDY 2019
of Engineering and Technology Card Fraud MUNENDRA2, Mr. S.
(IRJET) Detection GOKULKRISHNAN3

3. IEEE TRANSACTIONS ON Delay Mitigation AD MUBEEN1 , (Senior March 9, 2017

in Offloaded Member, IEEE), PAVLOS
SUSTAINABLE COMPUTING Cloud NIKOLAIDIS1 , ALMA
Controllers in DIDIC1 , HONGYU PEI-
Industrial IoT BREIVOLD2 , KRISTIAN
SANDSTRÖM3 , AND MORIS
BEHNAM1 , (Member, IEEE)
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“Credit Card Fraud Detection Using Machine Learning”:The paper focuses on the detection and prediction of
credit card fraud using machine learning techniques, specifically employing algorithms like Random Forest and Adaboost.
The main methodology involves classifying transactions as either fraudulent or non-fraudulent by training and deploying
these algorithms on a dataset. The dataset is pre-processed, and features like 'Time' and 'Amount' are handled separately due
to confidentiality reasons. Evaluation criteria such as accuracy, precision, recall, and F1-score are used to compare the
performance of the algorithms, with the confusion matrix providing insights into true positive rate and other measures. The
study also references other works in the field that utilize techniques like neural networks, data mining, and deep learning for
credit card fraud detection. Additionally, the use of techniques like PCA transformation, SMOTE, and Whale Optimization
Techniques (WOA) is highlighted to address issues like imbalanced data and improve convergence speed.

“A Research Paper on Credit Card Fraud Detection”: The paper "Credit Card Fraud Detection" by Bora Mehar Sri
Satya Teja, Boomireddy Munendra, and Mr. S. Gokulkrishnan focuses on using machine learning algorithms to detect credit
card fraud. They employ techniques like Random Forest and Decision Tree Classifiers, and evaluate models based on
accuracy scores and confusion matrices. The dataset includes transactions made by European credit card holders in September
2013, with a focus on addressing imbalance and concept drift. The study emphasizes the importance of categorizing
transactions before applying machine learning algorithms for improved accuracy in fraud detection.

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“Enhanced credit card fraud detection based on attention mechanism and LSTM deep model” : The paper
proposes a credit card fraud detection system based on LSTM networks and attention mechanisms. The system addresses
the challenges of fraud detection by employing several key techniques. First, it optimizes the learning process using feature
selection and dimension reduction algorithms like PCA, t-SNE, and UMAP. Second, it tackles imbalanced datasets using
the Synthetic Minority Oversampling Technique (SMOTE), which helps improve the learning rate. Third, the system
models transaction sequences using LSTM recurrent neural networks, allowing it to capture the context of consumer
spending behavior and detect anomalies. Additionally, the system applies attention mechanisms to LSTM networks,
enabling the model to focus on important parts of the input sequence for better fraud detection.

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 Implementation
Implementation(1/3)
1. Environmental Setup

2.Cassandra

3.Data Collection

4. Data Preprocessing

5. Machine Learning Pipeline

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Implementation(2/3)
6.Alerting System

7. Transaction Logging

8. User Interface

9. Testing

10. Scalability and Performance:

12. Security:
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Implementation(3/3)
13. Documentation

14. Future Enhancements

15. Maintenance

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Diagrams
Communication with cloud
Architecture and OPC client layer

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Decision Tree

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Decision Tree
The decision tree starts at the top node, which considers the transaction amount (V16) and splits the data based
on whether the amount is less than or equal to 1.721. This split value is determined during the training process to
minimize the Gini impurity, which is a measure of how often a randomly chosen element would be incorrectly
classified.

If the amount is less than or equal to 1.721, the tree moves to the left branch; otherwise, it moves to the right
branch. This process continues with different features at each node, such as V14 in the root node of the tree you
provided, and further splits are made based on these features.

The split at 1.042 for feature V14 is chosen to minimize the Gini impurity at that node. If V14 is less than or equal
to 1.042, the transaction is classified as non-fraudulent. If V14 is greater than 1.042, the tree proceeds to further
splits based on other features to classify transactions.

The decision tree continues to make splits based on different features, aiming to separate fraudulent and non-
fraudulent transactions effectively. Each split is chosen to minimize the Gini impurity and improve the overall
classification performance of the tree.

However, decision trees are prone to overfitting, where the model learns the training data too well and performs
poorly on new, unseen data. Regularization techniques, such as setting a maximum depth for the tree or pruning,
can help prevent overfitting and improve the generalization of the model. CSQ 413 SEMINAR 12
Website Interface
Use case setup

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Website Interface

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 Results
 Streamlined fraud detection process: The program automates the fraud detection process, reducing
manual effort and enabling real-time monitoring of transactions.

 Scalable solution: The program's design allows for scalability, capable of handling increasing
transaction volumes without compromising performance.

Comprehensive transaction analysis: Utilizing machine learning algorithms and preprocessing

techniques, the program provides detailed insights into transaction patterns and fraud indicators.

User-friendly interface: The program features an intuitive user interface, facilitating easy interaction and
ensuring accessibility for users with varying levels of technical expertise.

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 Conclusion

 Developed a robust credit card fraud detection program using machine learning pipelines, SMS
alerts and email notifications, enhancing the security of financial transactions.
 Implemented a user-friendly interface for uploading transaction data and receiving fraud detection
results, improving accessibility and usability.
 Utilized decision trees to efficiently classify transactions as fraudulent or non-fraudulent, achieving
high accuracy in identifying potential fraud cases.
 Future enhancements include integrating advanced machine learning algorithms for improved fraud
detection and implementing additional security measures to further protect customer data.

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 References
1)A Survey Paper On Credit Card Fraud Detection Techniques
2)Credit Card Fraud Detection: A Realistic Modeling and a Novel Performance Evaluation Method
3)Cost-sensitive Learning for Credit Card Fraud Detection
4) Online Fraud Detection in E-Commerce Using Deep Learning
5)Detection of Evolving Credit Card Fraud Using a Hybrid Machine Learning Approach
6)Enhancing Credit Card Fraud Detection Performance Using Social Network Analysis
7) A Machine Learning Based Credit Card Fraud Detection Using the GA Algorithm for Feature
Selection
8) Credit Card Fraud Detection with Imbalanced Data Sets Using Support Vector Machines
9)Detecting Credit Card Fraud: A Bagging Approach
10) Application of Recurrent Neural Networks for Credit Card Fraud Detection

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THANK YOU

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