SlideShare a Scribd company logo
Fraud Prevention Using Deep Learning
Venkatesh Ramanathan
H2O World 2014
November 19, 2014
Outline(
About(PayPal(
Fraud(Preven3on(@(PayPal(
Fraud(Preven3on(Dilemma(&(Solu3on((Deep(Learning)(
Experimental(Setup(
Results(
Conclusions(
About PayPal
Unmatched CompetitiveAdvantage
+150M Active Digital
Wallets
Deep Relationships Core Competency
In Risk
Global Platform with
Huge Momentum
4321
143M
2013
2012
123M
PAYMENT CODE WEARABLE TECH
QR scanning that generates
a payment code for easy
check out
Fully able to integrate with
existing POS systems; no
rip & replace
Available in select markets
today
Payments on any type
of mobile device
Available in select
markets today
About PayPal
Innovative leader in payment…

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Fraud(Preven3on(@(PayPal(
StateDofDthe(art(feature(engineering,(
machine(learning(and(sta3s3cal(
models(
Highly(scalable(and(mul3Dlayered(
infrastructure(soIware((
Superior(team(of(data(scien3sts,(
researchers,(financial(and(
intelligence(analysts(
Fraud(Preven3on(@(PayPal(
• Employs(stateDofDthe(art(machine(learning(and(
sta3s3cal(models(to(flag(fraudulent(behavior(upDfront(
• More(sophis3cated(algorithms(aIer(transac3on(is(
complete(
Transac3on(
Level(
• Monitor(account(level(ac3vity(to(iden3fy(abusive(
behavior(
• Abusive(paPern(include(frequent(payments,(suspicious(
profile(changes(
Account(Level(
• Monitor(accountDtoDaccount(interac3on(
• Frequent(transfer(of(money(from(several(accounts(to(
one(central(account((
Network(Level(
Fraud(Preven3on(Dilemma(
Fraudsters(are(becoming(increasingly(smarter(and(
adap3ve(
Need(costDeffec3ve(solu3ons(that(can(model(
complex(aPack(paPerns(not(previously(observed(((
Need(scalable(and(computa3onally(efficient(
predic3on(models(
Fraud(Preven3on(Dilemma(
Solu3on:(Deep(Learning(
• Helps(to(unearth(lowDlevel(complex(abstrac3ons(
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present(in(the(training(examples(
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recogni3on(
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Learning?(
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• Superior(performance(
• Flexible(deployment(
• Work(seamlessly(with(other(big(data(frameworks(
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H2O(
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Mapper(
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failed(
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memory(upfront(
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limita3ons(
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R(
H2O(
Cloud(
HDFS( HDFS(
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CPUs;(144GB(RAM)(
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Cloud(
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compressed(
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2( 0.762(
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Best(
performance(
with(6(layers(
Results(
How(much(depth(is(required?(
Best(
performance(
with(600(
neurons(
#(of(hidden(layersD6(
Results(
Ac6va6on'func6on'
(6'layers;'600'neurons)'
AUC'
Tanh( 0.801(
Rec3fier( 0.856(
Maxout( 0.826(
Rec6fierWithDropout' 0.865'
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Best(performance(
with(
Rec3fierWithDropout(
Results(
Feature'subset' AUC'
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Subset7'
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AUC'
Epoch:'500'
Hidden:'6'layers'
Neurons:'600'each'layer'
Subset7'
'
AUC'
0.751( 0.86(
Can(deep(network(improve(subset7?(
11%(improvement(in(
performance((with(
1/3rd(of(the(feature(
set(
Results(
Test'Set' AUC'
Week(4( 0.856(
Week(8( 0.861(
Week(12( 0.852(
Week(16( 0.858(
Week(20( 0.853(
Is(deep(learning(temporally(robust?(
Performance(within(
1%(difference(upto(20(
weeks(
Conclusions(
•  Deep(Learning(using(H2O(is(beneficial(for(payment(fraud(
preven3on(
–  Network(architecture(D(6(layers(with(600(neurons(each(performed(the(
best(
–  Ac3va3on(func3on((D(Rec3fierWithDropout(performed(the(best(
–  Improved(performance(with(limited(feature(set(&(a(deep(network(
(11%(improvement(with(a(third(of(the(original(feature(set,(6(hidden(
layers,(600(neurons(each)(
–  Robust(to(temporal(varia3ons(
Conclusions(
•  Lessons(learned(in(using(H2O(
–  Slow(import(process((
–  Issues(with(compressed(data,(missing(values,(sparse(data(
–  Require(knowledge(of(performance(knobs(
–  Fantas3c(support(from(H2O(team(
•  Next(Steps(
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