Graph analytics for real-time scoring of cross-channel transactional fraud

Abstract

We present a new approach to cross channel fraud detection: build graphs representing transactions from all channels and use analytics on features extracted from these graphs. Our underlying hypothesis is community based fraud detection: an account (holder) performs normal or trusted transactions within a community that is “local” to the account. We explore several notions of community based on graph properties. Our results show that properties such as shortest distance between transaction endpoints, whether they are in the same strongly connected component, whether the destination has high page rank, etc., provide excellent discriminators of fraudulent and normal transactions whereas traditional social network analysis yields poor results. Evaluation on a large dataset from a European bank shows that such methods can substantially reduce false positives in traditional fraud scoring. We show that classifiers built purely out of graph properties are very promising, with high AUC, and can complement existing fraud detection approaches.