Credit Card Fraud Detection using Deep Learning based on Auto-Encoder and Restricted Boltzmann Machine

Abstract

Frauds have no constant patterns. They always change their behavior; so, we need to use an unsupervised learning. Fraudsters learn about new technology that allows them to execute frauds through online transactions. Fraudsters assume the regular behavior of consumers, and fraud patterns change fast. So, fraud detection systems need to detect online transactions by using unsupervised learning, because some fraudsters commit frauds once through online mediums and then switch to other techniques. This paper aims to 1) focus on fraud cases that cannot be detected based on previous history or supervised learning, 2) create a model of deep Auto-encoder and restricted Boltzmann machine (RBM) that can reconstruct normal transactions to find anomalies from normal patterns. The proposed deep learning based on auto-encoder (AE) is an unsupervised learning algorithm that applies backpropagation by setting the inputs equal to the outputs. The RBM has two layers, the input layer (visible) and hidden layer. In this research, we use the Tensorflow library from Google to implement AE, RBM, and H2O by using deep learning. The results show the mean squared error, root mean squared error, and area under curve.