Credit Card Fraud Detection as a Classification Problem

Credit Card Fraud Detection as a Classification Problem

In this data science project, we will predict the credit card fraud in the transactional dataset using some of the predictive models.

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Ray Han

Tech Leader | Stanford / Yale University

I think that they are fantastic. I attended Yale and Stanford and have worked at Honeywell,Oracle, and Arthur Andersen(Accenture) in the US. I have taken Big Data and Hadoop,NoSQL, Spark, Hadoop... Read More

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Lead Consultant, ITC Infotech

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What will you learn

Understanding the problem
Importing required libraries and understanding their use
Importing data and learning its structure
Performing basic EDA
Scaling different variables
Outlier treatment
Building basic Classification model with Random Forest
Nearmiss technique for undersampling data
SMOTE for oversampling data
cross validation in the context of undersampling and oversampling
Pipelining with sklearn/imblearn
Applying Linear model: Logistic Regression
Applying Ensemble technique: Random Forest
Applying Non Linear Algorithms: Support Vector Machine, Decision Tree and k-Nearest Neighbour
Making predictions on test set and computing validation metrics
ROC curve and Learning curve
Comparison of results and Model Selection
Visualization with seaborn and matplotlib

Project Description

It is vital that credit card companies are able to identify fraudulent credit card transactions so that customers are not charged for items that they did not purchase. The dataset used contains transactions made by credit cards in September 2013 by european cardholders. This dataset presents transactions that occurred in two days, where we have 492 frauds out of 284,807 transactions. The dataset is highly unbalanced, the positive class (frauds) account for 0.172% of all transactions. The dataset has been collected and analyzed during a research collaboration of Worldline and the Machine Learning Group (http://mlg.ulb.ac.be) of ULB (Universite Libre de Bruxelles) on big data mining and fraud detection. More details on current and past projects on related topics are available on http://mlg.ulb.ac.be/BruFence and http://mlg.ulb.ac.be/ARTML.

As the dataset was created using a PCA, preprocessing of data is of little scope in this problem. The imbalance between classes is compensated using oversampling and undersampling. The logistic regression, random forest, support vector machine, k-means are used, within a cross-validation framework. Lastly the recall and accuracy are considered as metrics while choosing the best classifier. A buffer section on outlier detection is added at the end.

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Curriculum For This Mini Project

Business Problem
04m
Data Science Problem
10m
Solution Workflow
10m
Show me the Data
08m
Exploratory Data Analysis - Part 1
07m
Exploratory Data Analysis - Part 2
09m
Data Preparation - Part 1
06m
Data Preparation - Part 2
08m
Validation Metrics
10m
Base Model
08m
Undersampling Models - Part 1
12m
Undersampling Models - Part 2
07m
Oversampling Models
05m
Best Model
14m