Bayesian Optimized Random Forest Classifier for Improved Credit Card Fraud Detection: Overcoming Challenges and Limitations

In the financial sector, credit card fraud is a common issue that costs both people and organizations a lot of money. The ability of machine learning algorithms to automatically identify patterns and anomalies from big datasets has made them a common method for fraud detection. In order to increase the detection of credit card fraud, we suggest an improved Bayesian random forest classifier in this article. By using Bayesian optimization to choose the ideal hyperparameters for the model, we handle the difficulties and restrictions of conventional random forest classifiers. Using an openly accessible dataset on credit card fraud, the proposed method is assessed and contrasted with other cutting-edge approaches. By obtaining an accuracy of 99.6% and an area under the curve (AUC) of 0.99, our findings demonstrate that the suggested optimized Bayesian random forest classifier outperforms conventional random forest and other benchmark methods. We also examine the significance of features in fraud identification in order to show the model’s interpretability. Finally, we discuss the suggested strategy’s drawbacks and potential future developments. Our study aids in the creation of reliable and effective fraud detection tools for the finance sector. The suggested approach can be used as a decision support tool for fraud analysts and detectives and can be applied to a variety of fraud detection issues beyond credit card fraud.