The challenge is to recognize fraudulent credit card transactions so that the customers of credit card companies are not charged for items that they did not purchase.
Main challenges involved in credit card fraud detection are:
- Enormous Data is processed every day and the model build must be fast enough to respond to the scam in time.
- Imbalanced Data i.e most of the transactions (99.8%) are not fraudulent which makes it really hard for detecting the fraudulent ones
- Data availability as the data is mostly private.
- Misclassified Data can be another major issue, as not every fraudulent transaction is caught and reported.
- Adaptive techniques used against the model by the scammers.
How to tackle these challenges?
- The model used must be simple and fast enough to detect the anomaly and classify it as a fraudulent transaction as quickly as possible.
- Imbalance can be dealt with by properly using some methods which we will talk about in the next paragraph
- For protecting the privacy of the user the dimensionality of the data can be reduced.
- A more trustworthy source must be taken which double-check the data, at least for training the model.
- We can make the model simple and interpretable so that when the scammer adapts to it with just some tweaks we can have a new model up and running to deploy.
Before going to the code it is requested to work on a jupyter notebook. If not installed on your machine you can use Google colab.
You can download the dataset from this link
If the link is not working please go to this link and login to kaggle to download the dataset.
Code : Importing all the necessary Libraries
Code : Loading the Data
Code : Understanding the Data
Code : Describing the Data
(284807, 31) Time V1 ... Amount Class count 284807.000000 2.848070e+05 ... 284807.000000 284807.000000 mean 94813.859575 3.919560e-15 ... 88.349619 0.001727 std 47488.145955 1.958696e+00 ... 250.120109 0.041527 min 0.000000 -5.640751e+01 ... 0.000000 0.000000 25% 54201.500000 -9.203734e-01 ... 5.600000 0.000000 50% 84692.000000 1.810880e-02 ... 22.000000 0.000000 75% 139320.500000 1.315642e+00 ... 77.165000 0.000000 max 172792.000000 2.454930e+00 ... 25691.160000 1.000000 [8 rows x 31 columns]
Code : Imbalance in the data
Time to explain the data we are dealing with.
Only 0.17% fraudulent transaction out all the transactions. The data is highly Unbalanced. Lets first apply our models without balancing it and if we don’t get a good accuracy then we can find a way to balance this dataset. But first, let’s implement the model without it and will balance the data only if needed.
Code : Print the amount details for Fraudulent Transaction
Amount details of the fraudulent transaction count 492.000000 mean 122.211321 std 256.683288 min 0.000000 25% 1.000000 50% 9.250000 75% 105.890000 max 2125.870000 Name: Amount, dtype: float64
Code : Print the amount details for Normal Transaction
Amount details of valid transaction count 284315.000000 mean 88.291022 std 250.105092 min 0.000000 25% 5.650000 50% 22.000000 75% 77.050000 max 25691.160000 Name: Amount, dtype: float64
As we can clearly notice from this, the average Money transaction for the fraudulent ones is more. This makes this problem crucial to deal with.
Code : Plotting the Correlation Matrix
The correlation matrix graphically gives us an idea of how features correlate with each other and can help us predict what are the features that are most relevant for the prediction.
In the HeatMap we can clearly see that most of the features do not correlate to other features but there are some features that either has a positive or a negative correlation with each other. For example, V2 and V5 are highly negatively correlated with the feature called Amount. We also see some correlation with V20 and Amount. This gives us a deeper understanding of the Data available to us.
Code : Separating the X and the Y values
Dividing the data into inputs parameters and outputs value format
(284807, 30) (284807, )
Training and Testing Data Bifurcation
We will be dividing the dataset into two main groups. One for training the model and the other for Testing our trained model’s performance.
Code : Building a Random Forest Model using skicit learn
Code : Building all kinds of evaluating parameters
The model used is Random Forest classifier The accuracy is 0.9995611109160493 The precision is 0.9866666666666667 The recall is 0.7551020408163265 The F1-Score is 0.8554913294797689 The Matthews correlation coefficient is0.8629589216367891
Code : Visulalizing the Confusion Matrix
Comparison with other algorithms without dealing with the imbalancing of the data.
As you can see with our Random Forest Model we are getting a better result even for the recall which is the most tricky part.
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