The effect of feature extraction and data sampling on credit card fraud detection

Abstract

Abstract Training a machine learning algorithm on a class-imbalanced dataset can be a difficult task, a process that could prove even more challenging under conditions of high dimensionality. Feature extraction and data sampling are among the most popular preprocessing techniques. Feature extraction is used to derive a richer set of reduced dataset features, while data sampling is used to mitigate class imbalance. In this paper, we investigate these two preprocessing techniques, using a credit card fraud dataset and four ensemble classifiers (Random Forest, CatBoost, LightGBM, and XGBoost). Within the context of feature extraction, the Principal Component Analysis (PCA) and Convolutional Autoencoder (CAE) methods are evaluated. With regard to data sampling, the Random Undersampling (RUS), Synthetic Minority Oversampling Technique (SMOTE), and SMOTE Tomek methods are evaluated. The F1 score and Area Under the Receiver Operating Characteristic Curve (AUC) metrics serve as measures of classification performance. Our results show that the implementation of the RUS method followed by the CAE method leads to the best performance for credit card fraud detection.

Keywords

• Credit Card Fraud
• Random Undersampling
• SMOTE
• SMOTE Tomek
• PCA
• Convolutonal Autoencoder