The Importance of Future Information in Credit Card Fraud Detection

Van Bach Nguyen · Kanishka Ghosh Dastidar · Michael Granitzer · Wissam Siblini

[ Abstract ]
Mon 28 Mar 10:15 a.m. PDT — 11:45 a.m. PDT


Fraud detection systems (FDS) mainly perform two tasks: (i) real-time detection while the payment is being processed and (ii) posterior detection to block the card retrospectively and avoid further frauds. Since human verification is often necessary and the payment processing time is limited, the second task manages the largest volume of transactions. In the literature, fraud detection challenges and algorithms performance are widely studied but the very formulation of the problem is never disrupted: it aims at predicting if a transaction is fraudulent based on its characteristics and the past transactions of the cardholder. Yet, in posterior detection, verification often takes days, so new payments on the card become available before a decision is taken. This is our motivation to propose a new paradigm: posterior fraud detection with “future” information. We start by providing evidence of the on-time availability of subsequent transactions, usable as extra context to improve detection. We then design a Bidirectional LSTM to make use of these transactions. On a real-world dataset with over 30 million transactions, it achieves higher performance than a regular LSTM, which is the state-of-the-art classifier for fraud detection that only uses the past context. We also introduce new metrics to show that the proposal catches more frauds, more compromised cards, and based on their earliest frauds. We believe that future works on this new paradigm will have a significant impact on the detection of compromised cards.

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