Improving Accuracy of Credit Card Fraud Detection Using Supervised Machine Learning Models and Dimension Reduction

Abstract

Credit card fraud is a serious crime, and it is a common type of identity theft. Financial institutions and consumers are experiencing economical losses due to financial fraud caused by credit card transactions. Machine Learning Models can aid and alleviate credit card fraud by providing real time detection of credit card fraud before it takes place. The problem that arises with machine learning models is poor performance in terms of accuracy if the data objects in dataset have high dimensionality. In this paper we have tested and compared six machine learning models in detecting credit card fraud. Furthermore, dimension reduction techniques was used to improve the performance of these machine learning models. The results show improved accuracy on the machine learning models after applying dimension reduction and removing anomalies and imbalance.