Data Mining Application for Cyber Credit-Card Fraud Detection System

Abstract

Since the evolution of the internet, many small and large companies have moved their businesses to the internet to provide services to customers worldwide. Cyber credit card fraud or no card present fraud is increasingly rampant in the recent years for the reason that the credit card is majorly used to request payments by these companies on the internet. Therefore the need to ensure secured transactions for credit-card owners when consuming their credit cards to make electronic payments for goods and services provided on the internet is a criterion. Data mining has popularly gained recognition in combating cyber credit-card fraud because of its effective artificial intelligence (AI) techniques and algorithms that can be implemented to detect or predict fraud through Knowledge Discovery from unusual patterns derived from gathered data. In this study, a system’s model for cyber credit card fraud detection is discussed and designed. This system implements the supervised anomaly detection algorithm of Data mining to detect fraud in a real time transaction on the internet, and thereby classifying the transaction as legitimate, suspicious fraud and illegitimate transaction. The anomaly detection algorithm is designed on the Neural Networks which implements the working principal of the human brain (as we humans learns from past experience and then make our present day decisions on what we have learned from our past experience). To understand how cyber credit card fraud are being committed, in this study the different types of cyber fraudsters that commit cyber credit card fraud and the techniques used by these cyber fraudsters to commit fraud on the internet is discussed.