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This study analyzes credit card fraud detection techniques using KNN and outlier detection methods to minimize false alarms and enhance detection rates. The KNN algorithm demonstrates effective performance compared to other techniques like Logistic Regression and Decision Trees, particularly on large datasets. The authors conclude that their proposed model is promising and robust for improving the safety of financial transactions.

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Paper-1

This study analyzes credit card fraud detection techniques using KNN and outlier detection methods to minimize false alarms and enhance detection rates. The KNN algorithm demonstrates effective performance compared to other techniques like Logistic Regression and Decision Trees, particularly on large datasets. The authors conclude that their proposed model is promising and robust for improving the safety of financial transactions.

Uploaded by

vicer3712
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Paper # 1

Title / Question: Analysis on Credit Card Fraud Identification Techniques based on


KNN and Outlier Detection
N.Malini, Dr.M.Pushpa

Objectives / Goal: The goal of this study is to retrieve the best solution for the
fraud detection problem. The objective is to minimize the false alarm rates and
increase the fraud detection rate using KNN algorithm and outlier detection
methods. Any of these techniques can be used to identify and stop fraudulent
transactions by the bank's credit card fraud detection system.

Methodology/Theory: Fraud detection is a very difficult task that cannot be


accomplished by a technology that can guarantee a 100% success rate. All of the
methods now in use can probably forecast fraud transactions, but they cannot
guarantee the outcomes. Let's look at some characteristics of a reliable fraud
detection technique:
a) It must be capable of correctly identifying the frauds
b) It must identify fraud cases fast
c) A real transaction should never be regarded as fraud
When supervised learning techniques are used in credit card fraud detection
systems, the K-nearest neighbor algorithm performs remarkably well. According to
the KNN category, the new instance query will be categorized using this manner.
Aha, Albert, and Kibler used this technique for the first time in 1991.
Unsupervised learning is preferred in the outlier detection method because it can
result in new understandings and visualizations of the observation data. The issue
with supervised methods is that the model must be trained on both fraudulent and
non-fraudulent before the method can be used in a real-world situation.
Software Tools: This article makes no mention of any particular program or
software that were utilized for design, coding, or simulation.

Test / Experiment: To test the proposed model, the researchers compared its
performance with Logistic Regression, Decision Tree, Artificial Neural Network,
Hidden Markov Model, and Support vector machine. The researchers put the
proposed model to the test by comparing its performance to that of the other
techniques. Performance is assessed based on calculation time and limitation of
memory.

Simulation/Test Data: The article makes no mention of the precise parameters


chosen for the simulation or test data.

Result / Conclusion: Building a precise and well-organized credit card fraud


detection system is one of the main tasks for financial transactions in order to
advance safety measures of the monetary transaction systems consistently and
effectively. We can utilize KNN method to identify the anomaly of the target
instance by doing oversampling and identifying the primary direction of the data.
On large online datasets, outlier detection is quick and effective. Experiment
findings, however, demonstrate that the KNN method is accurate and effective
when compared to power methods and other well-known anomaly detection
techniques.
Obstacles/Challenges: The article does not mention specific methodological
obstacles or challenges faced during the research.
However, there are a number of possible sources of inaccuracy that researchers
engaged in this kind of research could run across. Some possible challenges are:
KNN method’s memory limitation, outlier detection mechanism uses less memory
but is not as accurate as KNN.

Terminology: Fraud Detection, K-Nearest Neighbor Algorithm, Outlier Detection

Review Judgment: This study's experiments allow for a thorough comparison of


various algorithms and methods. The authors’ model, especially the KNN
algorithm shows competitive and effective performance compared to other
methods or algorithms. The authors suggest that the proposed model is promising
and robust, especially for large datasets.

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