Enhancing Credit Card Fraud Detection through LSTM-Based Sequential Analysis with Early Stopping

There is still a serious problem with credit card fraud in the world of financial transactions, requiring innovative solutions to effectively detect and halt illicit behavior. This research presents a unique method of detecting credit card fraud by strategically implementing early pausing in a Long Short-Term Memory (LSTM) neural network. Leveraging the sequential dependencies inherent in transaction data, the LSTM model demonstrates remarkable efficacy in discerning fraudulent from legitimate transactions. The early stopping mechanism ensures that the model’s training halts at the optimal epoch, preventing over fitting and enhancing generalization. Our thorough analysis highlights the model’s versatility by demonstrating a dynamic compromise between recall and accuracy throughout training. Practical implications include enhanced fraud detection accuracy, reduced false alarms, and real-time decision support for financial institutions. The model’s adaptability and generalization make it a valuable asset in the ongoing battle against credit card fraud, contributing to a more secure financial environment. Future research directions may explore additional features and alternative architectures to further advance fraud detection capabilities.