Project report

CREDIT FRAUD DETECTION

Submitted By:
Foram Thakkar
Enrollment no:
21291371078
DE-Semester-IV Information Technology (Feb-2023)

SUBMITTED TO,
Department of Information Technology
B.S Patel College of Engineering

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CERTIFICATE
This is to certify the following students of Diploma in
Information Technology Semester-IV have satisfactory
completed project on “CREDITCARD FRAUD DECTECTION”.

Sr.No Name of Student Enorollment No.

1. FORAM THAKKAR 21291371078

Examiners
______________

Guide/supervisor
______________

Head of Department
______________
Date: _________
Place: _________

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SR.NO TOPICS PAGE NO
1 Abstract
2 Feature
3 Software Requirement
4 Advantage/Disadvantage
5 E-R Diagram
6 Data Flow Diagram
7 Activity Diagram
8 Use case Diagram

ACKNOWLEDGEMENT
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 I express my sincere gratitude to all the persons who are
directly or indirectly associated with this project and who
have helped me to complete this project successfully. First
of all I am grateful for the help of my project guide. Prof.
Dharamsinh Sir who guided me through the project. His
encouraging guidance helped me to take up such a project
and complete it on time. My other classmates who inspired
me and my friends who gave me valuable suggestions are
also a part of my project work.
• With Sincere Regards from, Thakkar Foram

ABSTRACT
Credit card fraud detection is presently the most frequently
occurring problem in the present world. This is due to the rise in
both online transactions and e-commerce platforms. Credit card
fraud generally happens when the card was stolen for any
unauthorized purposes or even when the fraudster uses the credit
card information for his use. In the present world, we are facing
a lot of credit card problems. To detect the fraudulent activities,
the credit card fraud detection system was introduced.
Credit card fraud is a major concern for individuals, banks, and
retailers. In order to detect and prevent fraud, it is important to
have a robust fraud detection system. This project aims to
develop a credit card fraud detection system using data mining
techniques. The system will analyze the transaction data of
credit card users and detect any unusual or fraudulent
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The aim of this project is to predict whether a credit card
transaction is fraudulent or not, based on the transaction amount,
location and other transaction related data. It aims to track down
credit card transaction data, which is done by detecting
anomalies in the transaction data. Credit card fraud detection is
typically implemented using an algorithm that detects any
anomalies in the transaction data and notifies the cardholder (as
a precautionary measure) and the bank about any suspicious
transaction. The predominant one consists in creating a set of
features which are descriptive statistics obtained by aggregating
the sequences of transactions of the card-holders (sum of
amount, count of transactions, location from where the payment
is being made etc..). We used this method as a benchmark
feature engineering method for credit card fraud detection.

Introduction
I. INTRODUCTION
Nowadays Credit card usage has drastically increased across the
world, now people believe in going cashless and are completely
dependent on online transactions. The credit card has made the
digital transaction easier and more accessible. A huge number of
dollars of loss are caused every year by criminal credit card
transactions. Fraud is as old as mankind itself and can take an
unlimited variety of different forms.

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The PwC global economic crime survey of 2017 suggests that
approximately 48% of organizations experienced economic
crime. Huge Financial losses have been fraudulent effects on not
only merchants and banks but also the individual person who are
using the credits. Fraud may also affect the reputation and image
of a merchant causing non-financial losses that. For example, if
a cardholder is a victim of fraud with a certain company, he may
no longer trust their business and choose a competitor. Fraud
Detection is the process of monitoring the transaction behavior
of a cardholder to detect whether an incoming transaction is
authentic and authorized or not otherwise it will be detected as
illicit.
Credit card fraud is a huge ranging term for theft and fraud
committed using or involving at the time of payment by using
this card. The purpose may be to purchase goods without
paying, or to transfer unauthorized funds from an account.
Credit card fraud is also an add on to identity theft. As per the
information from the United States Federal Trade Commission,
credit card fraud was increased by 21 percent in 2008. Even
though credit card fraud, that crime which most people associate
with ID theft, decreased as a percentage of all ID theft
complaints in 2000, out of 13 billion transactions made
annually, approximately 10 million or one out of every 1300
transactions turned out to be fraudulent. Also, 0.05% (5 out of
every 10,000) of all monthly active accounts was fraudulent.
Today, fraud detection systems are introduced to control one-

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twelfth of one percent of all transactions processed which still
translates into billions of dollars in losses. Credit Card Fraud is
one of the biggest threats to business establishments today.
Credit card fraudsters employ many ways to commit fraud. In
simple terms, Credit Card Fraud is defined as “when an
individual uses another individuals’ credit card for personal
reasons while the owner of the card and the card issuer are not
aware of the fact that the card is being used”.
Card fraud begins either with the theft of the physical card. Card
numbers, generally the Primary Account Number (PAN) are
often reprinted on the card, and a magnetic stripe on the back
contains the data in machine-readable format. There are more
methods to commit credit card fraud. Fraudsters are very
talented and fast-moving people. In the Traditional approach, to
be identified by this paper is Application Fraud, where a person
will give the wrong information about himself to get a credit
card. There is also the unauthorized use of Lost and Stolen
Cards, which makes up a significant area of credit card fraud.
There are more enlightened credit card fraudsters, starting with
those who produce Fake and Doctored Cards; there are also
those who use Skimming to commit fraud. They will get this
information held on either the magnetic strip on the back of the
credit card, or the data stored on the smart chip is copied from
one card to another. Site Cloning and False Merchant Sites on
the Internet are becoming a popular method of fraud for many
criminals with a skilled ability for hacking. Such sites are

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developed to get people to hand over their credit card details
without knowing they have been swindled.
To deal with such types of Credit Card Frauds, in the proposed
system, I present a Behavior and Location Analysis (BLA)
Which does not require fraud signatures and yet is able to detect
frauds by considering a cardholder’s spending habit. Card
transaction processing sequence by the stochastic process of a
BLA. The details of items purchased in Individual transactions
are usually not known to any Fraud Detection System (FDS)
running at the bank that issues credit cards to the cardholders.
Hence, I feel that BLA is an ideal choice for addressing this
problem. Another important advantage of the BLA - based
approach is a drastic reduction in the number of False Positives
transactions identified as malicious by an FDS although they are
actually genuine. An FDS runs at a credit card issuing bank.
Each incoming transaction is submitted to the FDS for
verification. FDS receives the card details and the value of
purchase to verify whether the transaction is genuine or not. The
types of goods that are bought in that transaction are not known
to the FDS. It tries to find any anomaly in the transaction based
on the spending profile of the cardholder, shipping address, and
billing address, etc. If the FDS confirms the transaction to be of
fraud, it raises an alarm, and the issuing bank declines the
transaction.
The credit card fraud detection features use user behavior and
location scanning to check for unusual patterns. These patterns

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include user characteristics such as user spending patterns as
well as usual user geographic locations to verify his identity.
If any unusual pattern is detected, the system requires re-
verification. The system analyses user credit card data for
various characteristics. These characteristics include user
country, usual spending procedures. Based upon previous data
of that user the system recognizes unusual patterns in the
payment procedure. So now the system may require the user to
login again or even block the user for more than 3 invalid
attempts.
The Modules and their Description: This system has 6 Modules:
Registration, Login, Payment, Verification, Feedback, Logout.

A. Description
Step 1: Registration: Here, users first need to register
themselves with their respective details to access the system.
Step 2: Login: After a successful registration, users then need to
login into the system by inputting their credentials into the
system.
Step 3: Payment: Users can select payment mode to perform
transactions by providing card details like card no., CVV code,
Expiry Date and Holders name.

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Step 4: Verification: If the user performs a huge transaction,
then for security purposes, the system will automatically redirect
to the verification page to verify the user and to prevent misuse
of card in case lost.
Step 5: Feedback: Here, the user may provide feedback to the
admin regarding the working of the system.
Step 6: Logout: After a successful transaction, users may log out
from the system.
Our Paper is organized as follows: Methodology is presented in
section II. Procedure Used is presented in section III. Finally,
the result and Conclusions are presented in sections IV and V
respectively.
II. METHODOLOGY
We have four basic modules in the given system named as User,
Admin, System, Server/DB.

Step 1: User performs the registration of him/her self to the

system such that system performs the form submission function
(send details to the database) and Server/DB provides the
response that registration is being done successfully to the
System after all the details have been successfully stored in the
database.
Step 2: Then user performs the Login operation to the System
which in turn performs the Verify Details function, verifies the
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details entered by the user to the system from the details of the
respective user stored in the database. If the details of the user
match with his/her details stored in the database, then server
allows the user to access the system.
Step 3: User initiates the transaction by providing card details to
the system which in turn passes the command to the Server/DB
to check for the payment criteria.
Step 4: If there is any detail found stored in the database which
does not match with the details provided by the user to the
Server/DB then database redirects user for verification.
Step 5: User then provides the details required by database for
verification to the system which in turn provides those details to
the database to verify the security details entered by the user
against the details of user stored in database.
Step 6: If the security details provided by the user match with
the security details stored in the database of the respective user,
then the transaction made by the user becomes successful.
Step 7: Admin performs Login operation to the System to
modify/Delete/access for any user details, Server/DB retrieves
details of the user to the system and user successfully get logged
in.
Step 8: Admin also Manages all the security related issues to the
System which further get updated to the server and after server
gets updated it acknowledges the same to the System.

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Users perform various tasks such as Registration, Login,
Payment, Update Details, Checks Details, Verification, Provides
Feedback on the system. User and Administrator are connected
to each other via system. System is the interconnecting link
present which connects Users to the Administrator and vice-
versa. The administrator handles tasks such as Registration,
Login, Update Details, Checks Details provided by the user to
the system, and also it manages all the security related issues.
III. RESULT AND DISCUSSIONS
We have used the Behavior and Location Analysis approach to
identify any Credit Card Fraud. It uses user behavior and
location scanning to check for unusual patterns. These patterns
include user characteristics such as user spending patterns as
well as usual geographic locations to verify his identity. If any
unusual pattern is detected, the system requires re-verification.
The system analyses user credit card data for various
characteristics.
These characteristics include country, usual spending
procedures. Based upon previous data of that user the system
recognizes unusual patterns in the payment procedure. So now
the system may require the user to login again oz even block the
user for more than three invalid attempts.

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Even though there are many fraud detection techniques we can’t
say that this BLA based algorithm detects the fraud completely.
From our analysis, we can conclude that the accuracy of BLA
algorithm is good. It is evident from the above review that
several machine learning algorithms are used to detect fraud, but
the findings are not satisfactory. As a result, we'd like to use
BLA based algorithms to reliably detect credit card fraud. Our
Project main purpose is to making Credit Card Fraud Detection
awaking to people from credit card online frauds. The main
point of the credit card fraud detection system is necessary to
save our transactions & security. Our aim here is to detect 100%
of the fraudulent transactions while minimizing the incorrect
fraud classifications.

Features of this project:

• Real-time detection of fraud: The system will be

designed to detect fraud in real-time, allowing the
bank or retailer to take immediate action to prevent
further losses.

• Data analysis: The system will use data mining

techniques such as decision trees, association rule

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mining, and clustering to analyze the transaction data
of credit card users.

• User profiling: The system will create a user profile for

each credit card user, including demographic
information and spending habits. This information will
be used to detect any unusual activity.
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Alerts: The system will send alerts to the bank or
retailer if it detects any suspicious activity, allowing
them to take immediate action

• Some core features: The system stores previous

transaction patterns for each user.

• Based upon the user spending ability and even

country, it calculates user’s characteristics.

• More than 20 -30 %deviation of user's transaction

(spending history and operating country) is
considered as an invalid attempt and system takes
action.

Software Requirements:

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Operating system: Microsoft
Xp/2000/VISTA/Windows7
Platform: Microsoft Word 2007
Application Software: Ms Office 2003

HARDWARE REQUIREMENTS:
Processor: Pentium
RAM: 128 MB RAM
Hard Disk: 40 GB Hard Disk

Advantages/ Disadvantages:
Advantage:
Increased security: The system will help prevent fraudulent
activity, protecting the financial interests of both the bank and
the credit card user.

Improved customer experience: By detecting and preventing

fraud, the system will provide a better experience for the credit
card user, increasing their trust in the bank or retailer.

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Increased profits: By preventing fraud, the bank or retailer will
reduce their losses, leading to increased profits.

Disadvantages:

Complexity: The system may be complex to implement and

maintain, requiring a high level of technical expertise.

False positives: The system may generate false positive alerts,

leading to inconvenience for the credit card user.

Privacy concerns: The system will require access to personal

information and transaction data, which may raise privacy
concerns for some Users.

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ER-DIAGRAM :

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DATA-FLOW DIAGRAM:

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ACTIVITY DAIGRAM:

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USE CASE DAIGRAM:

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For our system you need to login in the form so that I can
help you in detecting the fraud :

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THANK YOU

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