Reducing Fraud Leakage Using Machine Learning-Based Behavioral Pattern Analysis
DOI:
https://doi.org/10.63282/3050-9262.IJAIDSML-V7I1P132Keywords:
Fraud Leakage, Machine Learning, Behavioral Biometrics, Anomaly Detection, Financial Security, Cybercrime Prevention, Algorithmic Governance, Real-Time ProcessingAbstract
The rapid proliferation of digital finance and e-commerce has catalyzed a corresponding surge in sophisticated cybercrime, rendering traditional security frameworks increasingly obsolete. This white paper examines the critical challenge of "fraud leakage" the volume of fraudulent activity that bypasses established defenses and proposes a transition toward Machine Learning (ML)-based behavioral pattern analysis. By moving from reactive, rule-based systems (RBS) to proactive, entity-centric behavioral monitoring, financial institutions can identify subtle anomalies in user interaction, temporal signatures, and navigation entropy that preceded material loss. This research synthesizes findings from supervised frameworks like XGBoost, optimized via SMOTE-ENN resampling, and unsupervised deep learning models such as Autoencoders integrated with Adaptive Reconstruction Threshold (ART) mechanisms. The study highlights how behavioral biometrics, including keystroke dynamics and gesture curvature, provide a robust shield against synthetic identity fraud and deep-fake driven account takeovers. Ultimately, the paper argues that the future of fraud prevention lies in hybrid architectures that balance detection precision with real-time operational efficiency and ethical governance, ensuring compliance with global mandates such as GDPR and PCI-DSS while maintaining a frictionless user experience.
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