International Journal of Computer Trends and Technology (IJCTT) volume 4 Issue10 Oct 2013

ISSN: 2231-2803 http://www.ijcttjournal.org Page3549

Protecting E-Commerce Systems From
Online Fraud
First Author

Second Author
P.PhaniAlekhya
Student,
Department of Computer
Science and Engineering,
QIS College of Engineering
& Technology, ongole,
Andhra Pradesh, India.

Sk.Mahaboob Basha
Assistant Professor,
Department of Computer
Science and Engineering,
QIS College of Engineering
&Technology, ongole,
Andhra Pradesh, India.




Abstract- Due to the advent of Internet technologies, E-
commerce widely adapted mode of business in modern
times. With the growth of E-commence domain credit
card usage has become a common phenomenon. This has
given chance to adversaries to commit fraud. In the real
world, there were plenty of instances of fraud cases. It has
its impact on financial outfits that issue credit cards, the
E-commerce business entities and also the customers of
the E-commerce applications. To overcome this problem
and to build confidence in the stakeholders of the E-
commerce many techniques came into existence. As
simple pattern matching methods are inadequate to solve
the problem many modern techniques came into
existence. They are based on Genetic programming,
Sequence Alignment, Machine learning, Fuzzy logic,
Data mining and Artificial intelligence. These techniques
are capable of detecting fraudulent transactions. In this
paper we explore various techniques being used. We also
build a prototype application which demonstrates the
efficiency of Genetic Programming to detect credit card
fraud. The empirical results revealed that the proposed
solution is effective.
Keywords Credit card fraud detection, fraud detection
techniques, E-commerce
INTRODUCTION
Credit card fraud detection is an active and continuous
research area as it involves monetary transactions. The
research is important in the light of web technologies that
support E-commerce applications in building and
managing. Moreover businesses in the world are going
online. The online businesses are able to reach global
markets and they reach global customers. The E-commerce
applications make it possible to shop items anytime and
anywhere. There are no time and geographical restrictions.
This has plenty of advantages for both consumers and
businesses. There are many kinds in E-commerce. B2B
(Business to Business), B2C (Business to Consumer) and
C2C (Consumer to Consumer) are the three popular forms
of E-commerce applications. The transactions in E-
commerce might have fraudulent transactions along with
genuine ones. It is essential to have a systemthat can detect
fraudulent transactions. Various techniques such as Hidden
Markov Model, Artificial Intelligence, Sequence
Alignment, and Genetic Programming came into existence
to combat this problem.
In this paper we implement Genetic Algorithm(GA) in
order to detect credit card fraud. The GA has provision for
evaluating populations continuously until a best fit is
found. The operators like cross over and mutation help in
International Journal of Computer Trends and Technology (IJCTT) volume 4 Issue10 Oct 2013
ISSN: 2231-2803 http://www.ijcttjournal.org Page3550

accurate prediction of fraud cases. We also built a
prototype application that demonstrates the efficiency of
the proposed solution. The experimental results revealed
that the application is very useful in real time systems. The
remainder of the paper is organized as follows. Section II
reviews relevant literature. Section III presents some of the
fraud detection techniques. Section IV provides details
about the proposed fraud detection technique and also the
prototype details. Section V shows experimental results
while section VI concludes the paper.
RELATED WORKS
Credit card fraud detection has become an inevitable part of
E-commerce applications. As the applications involve
monetary transactions, fraud detection techniques are
indispensable. Lot of research has been made in this area
[1], [2], and [3]. Many algorithms came into existence to
detect credit card fraud [4], [2]. The algorithms include
fuzzy logic [5], sequence alignment algorithm[6], [7], data
mining techniques [8], [9], machine learning and artificial
intelligence approaches [10], [11], [12]. There are other
techniques such as Web Services Based CCFD, CCFD
with Artificial Immune System[13], [14], Cardwatch [15],
Bayesian Belief Networks [4] , Intrusion Detection [13],
Case Based Reasoning for CCFD [4], Advanced Fraud
Detection [16], CCFD based on computational intelligence
[13], CCFD using self-organizing maps [13]. Many are
based on pattern matching, Meta learning and artificial
intelligence. In this paper we compare some of the
techniques which are good for CCFD.

COMPARISON OF CCFD SYSTEMS
In this section we compare various credit card fraud
detection techniques such as DempsterShafer theory and
Bayesian learning, Hidden Markov Model (HMM) and
Genetic Programming (GP).

DempsterShafer theory and Bayesian learning
approach
The DempsterShafer theory and Bayesian learning
approach is the combination of two approaches [17], [18],
[19]. The evidences frompast and correct are combined in
order to detect fraud. Information fusion is the approach
followed by this hybrid technique. Figure 1 shows the
overview of this hybrid approach.

Fig. 1 Hybrid approach for CCFD (excerpt from[16])

As seen in figure 1, this approach has four components.
They are rule based filter, Bayesian learner, transaction
history database and Dempster-Shafer adder. The evidences
found from multiple components are fused and the
detection is made. This approach is more accurate but
consumes more resources besides being slow.

CCFD using Hidden Markov Model (HMM)
This model is used to analyze credit card transactions. It
needs training data and also test data in order to detect
fraud. It uses K-means data mining algorithminternally.
The K-means algorithmtakes all credit card transactions
International Journal of Computer Trends and Technology (IJCTT) volume 4 Issue10 Oct 2013
ISSN: 2231-2803 http://www.ijcttjournal.org Page3551

and number of clusters as input and generates clusters that
are used in HMM. All the transactions are divided into low,
mediumand high, the three clusters. Once the clusters are
formed they are kept in a HMM. The HMM is used for
every new transaction. The amount in new transaction
should belong to either low, or mediumor high. If not the
transaction is suspected to be fraudulent and the
corresponding people or organizations are alerted. The
general overview of HMM is as shown below.
Fig. 2 Overview of HMM Model (excerpt from[16])

CCFD using GP
Genetic programming is widely used for solving various
problems. In this paper we implemented a Genetic
Algorithmto detect credit card fraud. This algorithmmakes
use of existing transactions of credit cards. It uses multiple
criteria to detect fraud. The criteria include credit card
usage frequency, credit card usage location, overdraft on
the credit card, and credit card book balance. The overview
of the GP approach is as shown in figure 3.

Fig. 3 Overview of proposed architecture for GP
As can be seen in figure 3, the data of credit cards is taken
fromdata warehouse. Then the data is subjected to rules
engine. The rules engine contains fraud case rules. The
filter and priority components take care of filtering and
priority setting. The genetic algorithm is responsible to
detect fraud.
PROTOTYPE IMPLEMENTATION
A prototype application has been built in J ava platform.
The application is developed with Graphical User Interface
(GUI) to be user-friendly. The environment used to build
the application includes a PC with 4GB RAM, Core 2 dual
processor running Windows XP operating system.
NetBeans is used as IDE. The important application screens
are presented in figure 4 and 5.
International Journal of Computer Trends and Technology (IJCTT) volume 4 Issue10 Oct 2013
ISSN: 2231-2803 http://www.ijcttjournal.org Page3552


Fig. 4 Dataset used for experiments
As seen in figure 4, the dataset contains credit card
transaction details for number of instances. This data is
used by GA proposed in this paper. The GA makes use of
the components as described in figure 3 in order to detect
fraudulent transactions. The results of detection are shown
in figure 5.

Fig. 5 Results of Fraud Detection
As can be seen in figure 5, based on various criteria
mentioned earlier, the fraud detection is done. The criteria
are used as part of genetic programming model proposed in
this paper. The results help in understanding the fraud
transactions and they can be used to train the systemfurther
in order to make new rules and achieve higher accuracy of
fraud detection.
EXPERIMENTAL RESUTLS
We compared the results of our approach with that of
Artificial intelligence, Hidden Markov Model, Sequence
Alignment, and Machine Learning. The comparison is
made in terms of true positives and false positives. Highest
true positives and least false positives are achieved by GP.

Fig. 6 Performance of CCFD techniques with respect to
true positives
As can be seen in figure 6, the performance of Genetic
Programming is 100%. It has achieved 100% true positives
when compared with other techniques such as AI, HMM,
SA and machine learning.
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Comparison of CCFD Techniques
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International Journal of Computer Trends and Technology (IJCTT) volume 4 Issue10 Oct 2013
ISSN: 2231-2803 http://www.ijcttjournal.org Page3553


Fig. 7 Performance of CCFD techniques with respect to
false positives
As can be seen in figure 7, the performance of Genetic
Programming is more. It has achieved very less percentage
of false positives when compared with other techniques
such as AI, HMM, SA and machine learning.

CONCLUSIONS AND FUTURE WORK
In this paper we studied the problemof credit card fraud in
E-commerce applications. We explored various approaches
to solve the problem. The knowledge of various approaches
can improve the scope of protecting E-commerce
applications. Finally we implemented genetic algorithmfor
credit card fraud detection. As the adversaries change their
means of attack every time, it is important to have constant
vigil on the methods they use and update the techniques
accordingly. In this paper build a prototype application in
J ava platformin order to demonstrate the proof of concept.
The application uses genetic algorithmto detect credit card
fraud. Data mining and other techniques are available to
solve this problem. However, we preferred GA as it is
efficient in detecting credit card fraud. The experimental
results reveal that the proposed application is useful and
can be used in real world systems.

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ISSN: 2231-2803 http://www.ijcttjournal.org Page3554

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