Fraud Detection Using Large-scale Imbalance Dataset

Abstract

In the context of machine learning, an imbalanced classification problem states to a dataset in which the classes are not evenly distributed. This problem commonly occurs when attempting to classify data in which the distribution of labels or classes is not uniform. Using resampling methods to accumulate samples or entries from the minority class or to drop those from the majority class can be considered the best solution to this problem. The focus of this study is to propose a framework pattern to handle any imbalance dataset for fraud detection. For this purpose, Undersampling (Random and NearMiss) and oversampling (Random, SMOTE, BorderLine SMOTE) were used as resampling techniques for the concentration of our experiments for balancing an evaluated dataset. For the first time, a large-scale unbalanced dataset collected from the Kaggle website was used to test both methods for detecting fraud in the Tunisian company for electricity and gas consumption. It was also evaluated with four machine learning classifiers: Logistic Regression (LR), Naïve Bayes (NB), Random Forest, and XGBoost. Standard evaluation metrics like precision, recall, F1-score, and accuracy have been used to assess the findings. The experimental results clearly revealed that the RF model provided the best performance and outperformed all other matched classifiers with attained a classification accuracy of 89% using NearMiss undersampling and 99% using Random oversampling.

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Exploring Resampling Techniques in Credit Card Default Prediction

“…The classi er's performance is enhanced by integrating multiple classi ers. Other studies have employed NearMiss undersampling to address imbalances in nancial crime datasets (Mqadi et al, 2021;Rubaidi et al, 2022). The studies found that machine learning algorithms performed very well using the NearMiss undersampling technique.…”

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