detection systems.

Many researchers have been actively working on to mitigate

the problems that are faced while building a fraud detection system (FDS) such as
class imbalance problem, class overlapping, change in fraud behaviors and so on.
In this chapter, we will talk about some of the past research works in this field.

In a recent study, Pozzolo et al. [PCB+14] have focussed on two different ways of fraud
detection:
static approach, where a detection model is trained in a seasonal manner (e.g.,
once a month or year) and online approach, where the model is updated
immediately after the new transaction data arrives. They have stated that the
online learning approach is a better approach since the fraud behaviors change

time by time. Pozzolo et al. [PCB+14] also proposed that the Average Precision
(AP), Area Under Curve (AUC), and PrecisionRank are the best measures for the fraud
detection
task. In another study, Pozzolo et al. [PBC+15] have concluded that random forest
is the best approach in the fraud detection task.
Awoyemi et al. [AAO17] have performed a data analysis of K-nearest neighbor, logistic regres-
sion, and Naive Bayes when applied on a credit card transaction data, which was further
resampled using Synthetic Minority Over-sampling Technique (SMOTE). The result showed that
K-neare