6.1.

 credit card fraud

The word credit is used to describe the practice of purchasing and selling products without money. Credit card is a small plastic
card used to offer credit service to the customer. Credit card is very popular and plays an important role in the field of electronic
shopping and online money transactions, which is growing every year.

As a result of the increasing use of credit card, fraudsters are seeking to find more ways to commit fraud that could cause major
losses to cardholders and banks. Credit card fraud is known to be a particular form of credit fraud. Credit card fraud takes several
types, current literature classifies them into many different categories. Laleh and Azgomi identify credit fraud as follows:

I. Offline Credit card fraud:

Happens when the plastic card is robbed to the shops by fraudsters and is used as the real cardholder. This is an unusual
kind of fraud because when cardholder reports about theft financial institutions lock the missing card immediately.

II. Online credit card fraud:

A popular and very dangerous fraud, information about credit cards is stolen by fraudsters to be used later in online
purchases on the Internet or by phone. The name "cardholder not present" for this form of fraud is also issued, while the
details of the card are generated using a following method: skimming, site cloning, loan card generators and phishing.

There are two classes of credit card fraud, namely application fraud and behavioral fraud. There is another classification. This
classification is based on the fraud technique of the fraudster. Application fraud happens when fraudsters submit incorrect
information and descriptions in the application form to open a new credit card. Fraudsters may use the information of others to
obtain credit cards or to obtain their new credit cards by using false personal information with a view to never repaying
purchases.

On the other hand, behavioral fraud occurs when fraudsters obtain the details of the cardholder to use them later for sales which
are currently made on the basis of the cardholder. These sales include telephone sales and e-commerce, which only include card
information. Ghosh and Reilly classified credit card fraud as follows:

1. Missing cards, stolen cards.

2. Counterfeit cards, please.

3. Theft of cards by mail or non-receipt of issue (NRI).

4. Order fraud by mail/telephone. In such situations, the customer is not physically present before the trader at the time
of the transaction, and there is no card imprint that can be obtained as a record of the transaction.

5. Merchant fraud may involve the "laundering" of false merchant receipts, collecting large amounts of money for
transactions that have never occurred.

6. The cardholder makes payments on a card that he/she has no intention of paying for. It's called bankruptcy fraud.

Another credit card fraud category was suggested by Patidar and Sharma. It was categorized into three categories: traditional
card related frauds, merchant related frauds and Internet frauds.
6.1.1. Credit card fraud detection.

The detection of fraud by credit card is one of the fields of fraud most widely investigated. Numerous authorization methods are
used to deter credit card fraud, such as fingerprints, credit card numbers, identity numbers, address of the cardholder, expiry
dates, etc. These methods are therefore not adequate to deter fraud by the credit card. Fraud detection methods must also be
used to evaluate data capable of detecting and preventing credit card fraud. Mostly, the technique for detecting credit card fraud
is to identify trends by automatically analyzing user spending behavior. The behavior of the customer's spending includes
information regarding the transaction amount, time difference since last purchase, weekday, item category, address of the
customer, etc. Anomaly based fraud detection is often used for the credit card fraud detection method in which the cardholder
profile is made up by analyzing the trend of cardholder spending actions. In doing so, any incoming transaction that is
inconsistent with the profile of the cardholder will be deemed suspicious. Profile approaches may be made on the basis of the
owner approach or the operating approach as classified by Chandola.

Each user is identified in an owner approach based on the credit card background of each credit card user. If a new transaction is
not in line with the profile of the customer, it is assumed to be a default. In the meantime, the operating method identifies
fraudulent transactions in some geographic locations resulting from transactions. In the other hand, a method to detect credit
card fraud in which dishonest people use their fingerprint designs to learn on their credit card FDS is often used to detect
mismanagement. In general, the approach to misuse detection is seldom used in credit card FDS or any other field of fraud. This is
because it cannot detect further fraud.

Table 3 therefore focuses exclusively on the method of anomaly and other forms of fraud. The most widely used methods for
generating credit card FDS are the form of classification in neuronal networking techniques, as can be seen from Table 3.