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How can AI Prevent Fraud?

#artificialintelligence

Multinational technology corporation IBM calculated that 72% of business leaders cited fraud as a growing concern in the last year, that $44 billion will be lost worldwide due to fraud by 2024, and that a quarter of e-commerce sales transactions that were declined by artificial intelligence (AI) were false positives. AI has become the leading tool for fighting fraud, but it can still be improved upon. In the past, rule-based engines and simple predictive models were used to computationally identify the majority of fraud attempts. But these methods have not kept up with the increasingly sophisticated nature of fraud attacks today. With a proliferation of digital technologies at criminals' disposal, fraud has grown in both scale and severity over the last few decades. Large criminal organizations and even state-sponsored groups use AI-like machine learning (ML) algorithms to defraud digital businesses for millions of dollars each year.


Modeling Users' Behavior Sequences with Hierarchical Explainable Network for Cross-domain Fraud Detection

arXiv.org Artificial Intelligence

With the explosive growth of the e-commerce industry, detecting online transaction fraud in real-world applications has become increasingly important to the development of e-commerce platforms. The sequential behavior history of users provides useful information in differentiating fraudulent payments from regular ones. Recently, some approaches have been proposed to solve this sequence-based fraud detection problem. However, these methods usually suffer from two problems: the prediction results are difficult to explain and the exploitation of the internal information of behaviors is insufficient. To tackle the above two problems, we propose a Hierarchical Explainable Network (HEN) to model users' behavior sequences, which could not only improve the performance of fraud detection but also make the inference process interpretable. Meanwhile, as e-commerce business expands to new domains, e.g., new countries or new markets, one major problem for modeling user behavior in fraud detection systems is the limitation of data collection, e.g., very few data/labels available. Thus, in this paper, we further propose a transfer framework to tackle the cross-domain fraud detection problem, which aims to transfer knowledge from existing domains (source domains) with enough and mature data to improve the performance in the new domain (target domain). Our proposed method is a general transfer framework that could not only be applied upon HEN but also various existing models in the Embedding & MLP paradigm. Based on 90 transfer task experiments, we also demonstrate that our transfer framework could not only contribute to the cross-domain fraud detection task with HEN, but also be universal and expandable for various existing models.


How to Measure the Success of a Recommendation System?

#artificialintelligence

Recommender systems are used in a variety of domains, from e-commerce to social media to offer personalized recommendations to customers. The benefit of recommendations for customers, such as reduced information overload, has been a hot topic of research. However, it's unclear how and to what extent recommender systems produce commercial value. It's challenging to create a reliable product suggestion system. However, defining what it means to be reliable is also a challenging task.


E-Commerce Dispute Resolution Prediction

arXiv.org Artificial Intelligence

E-Commerce marketplaces support millions of daily transactions, and some disagreements between buyers and sellers are unavoidable. Resolving disputes in an accurate, fast, and fair manner is of great importance for maintaining a trustworthy platform. Simple cases can be automated, but intricate cases are not sufficiently addressed by hard-coded rules, and therefore most disputes are currently resolved by people. In this work we take a first step towards automatically assisting human agents in dispute resolution at scale. We construct a large dataset of disputes from the eBay online marketplace, and identify several interesting behavioral and linguistic patterns. We then train classifiers to predict dispute outcomes with high accuracy. We explore the model and the dataset, reporting interesting correlations, important features, and insights.


RF-LighGBM: A probabilistic ensemble way to predict customer repurchase behaviour in community e-commerce

arXiv.org Artificial Intelligence

It is reported that the number of online payment users in China has reached 854 million; with the emergence of community e-commerce platforms, the trend of integration of e-commerce and social applications is increasingly intense. Community e-commerce is not a mature and sound comprehensive e-commerce with fewer categories and low brand value. To effectively retain community users and fully explore customer value has become an important challenge for community e-commerce operators. Given the above problems, this paper uses the data-driven method to study the prediction of community e-commerce customers' repurchase behaviour. The main research contents include 1. Given the complex problem of feature engineering, the classic model RFM in the field of customer relationship management is improved, and an improved model is proposed to describe the characteristics of customer buying behaviour, which includes five indicators. 2. In view of the imbalance of machine learning training samples in SMOTE-ENN, a training sample balance using SMOTE-ENN is proposed. The experimental results show that the machine learning model can be trained more effectively on balanced samples. 3. Aiming at the complexity of the parameter adjustment process, an automatic hyperparameter optimization method based on the TPE method was proposed. Compared with other methods, the model's prediction performance is improved, and the training time is reduced by more than 450%. 4. Aiming at the weak prediction ability of a single model, the soft voting based RF-LightgBM model was proposed. The experimental results show that the RF-LighTGBM model proposed in this paper can effectively predict customer repurchase behaviour, and the F1 value is 0.859, which is better than the single model and previous research results.


Non-Comparative Fairness for Human-Auditing and Its Relation to Traditional Fairness Notions

arXiv.org Artificial Intelligence

Bias evaluation in machine-learning based services (MLS) based on traditional algorithmic fairness notions that rely on comparative principles is practically difficult, making it necessary to rely on human auditor feedback. However, in spite of taking rigorous training on various comparative fairness notions, human auditors are known to disagree on various aspects of fairness notions in practice, making it difficult to collect reliable feedback. This paper offers a paradigm shift to the domain of algorithmic fairness via proposing a new fairness notion based on the principle of non-comparative justice. In contrary to traditional fairness notions where the outcomes of two individuals/groups are compared, our proposed notion compares the MLS' outcome with a desired outcome for each input. This desired outcome naturally describes a human auditor's expectation, and can be easily used to evaluate MLS on crowd-auditing platforms. We show that any MLS can be deemed fair from the perspective of comparative fairness (be it in terms of individual fairness, statistical parity, equal opportunity or calibration) if it is non-comparatively fair with respect to a fair auditor. We also show that the converse holds true in the context of individual fairness. Given that such an evaluation relies on the trustworthiness of the auditor, we also present an approach to identify fair and reliable auditors by estimating their biases with respect to a given set of sensitive attributes, as well as quantify the uncertainty in the estimation of biases within a given MLS. Furthermore, all of the above results are also validated on COMPAS, German credit and Adult Census Income datasets. In recent years, the rapid advancements in the fields of artificial intelligence (AI) and machine learning (ML) have resulted in the proliferation of algorithmic decision making in many practical applications. Examples include decision-support systems for judges whether or not to release a prisoner on parole [1], automated financial decisions in banks regarding granting or denying loans [2], and product recommendations by e-commerce websites [3].


Solution for Large-scale Long-tailed Recognition with Noisy Labels

arXiv.org Artificial Intelligence

This is a technical report for CVPR 2021 AliProducts Challenge. AliProducts Challenge is a competition proposed for studying the large-scale and fine-grained commodity image recognition problem encountered by worldleading ecommerce companies. The large-scale product recognition simultaneously meets the challenge of noisy annotations, imbalanced (long-tailed) data distribution and fine-grained classification. In our solution, we adopt stateof-the-art model architectures of both CNNs and Transformer, including ResNeSt, EfficientNetV2, and DeiT. We found that iterative data cleaning, classifier weight normalization, high-resolution finetuning, and test time augmentation are key components to improve the performance of training with the noisy and imbalanced dataset. Finally, we obtain 6.4365% mean class error rate in the leaderboard with our ensemble model.


Case Study 1: Customer satisfaction prediction on Olist Brazillian Dataset

#artificialintelligence

The Olist store is an e-commerce business headquartered in Sao Paulo, Brazil. This firm acts as a single point of contact between various small businesses and the customers who wish to buy their products. Recently, they uploaded a dataset on Kaggle that contains information about 100k orders made at multiple marketplaces between 2016 to 2018. What we purchase on e-commerce websites is affected by the reviews which we read about the product posted on that website. This firm can certainly leverage these reviews to remove those products which consistently receive negative reviews.


How to Grow a (Product) Tree: Personalized Category Suggestions for eCommerce Type-Ahead

arXiv.org Machine Learning

In an attempt to balance precision and recall in the search page, leading digital shops have been effectively nudging users into select category facets as early as in the type-ahead suggestions. In this work, we present SessionPath, a novel neural network model that improves facet suggestions on two counts: first, the model is able to leverage session embeddings to provide scalable personalization; second, SessionPath predicts facets by explicitly producing a probability distribution at each node in the taxonomy path. We benchmark SessionPath on two partnering shops against count-based and neural models, and show how business requirements and model behavior can be combined in a principled way.


EnsemFDet: An Ensemble Approach to Fraud Detection based on Bipartite Graph

arXiv.org Machine Learning

Fraud detection is extremely critical for e-commerce business. It is the intent of the companies to detect and prevent fraud as early as possible. Existing fraud detection methods try to identify unexpected dense subgraphs and treat related nodes as suspicious. Spectral relaxation-based methods solve the problem efficiently but hurt the performance due to the relaxed constraints. Besides, many methods cannot be accelerated with parallel computation or control the number of returned suspicious nodes because they provide a set of subgraphs with diverse node sizes. These drawbacks affect the real-world applications of existing methods. In this paper, we propose an Ensemble-based Fraud Detection (EnsemFDet) method to scale up fraud detection in bipartite graphs by decomposing the original problem into subproblems on small-sized subgraphs. By oversampling the graph and solving the subproblems, the ensemble approach further votes suspicious nodes without sacrificing the prediction accuracy. Extensive experiments have been done on real transaction data from JD.com, which is one of the world's largest e-commerce platforms. Experimental results demonstrate the effectiveness, practicability, and scalability of EnsemFDet. More specifically, EnsemFDet is up to 100x faster than the state-of-the-art methods due to its parallelism with all aspects of data.