Credit card fraud is the unauthorized use of a card, commonly after loss, theft, or counterfeiting. Detection focuses on purchases or purchase sequences that differ from normal behavior, while recognizing that unusual activity is not automatically fraudulent. section 1.1.2
Outlier detection supports fraud screening by combining known behavioral rules with searches for unusual activity that predefined rules may miss. Tests can be general, cardholder-specific, merchant-specific, time-sensitive, or adjusted for special events. section 1.1.2
Illustrative fraud indicators include:
- Two purchases occur far apart geographically within a short time window. section 1.1.2
- An application uses a nonexistent address, invalid phone number, or nonsensical email address. section 1.1.2
- A purchase conflicts with the cardholder’s history, merchant history, purchase time, or expected seasonal context. section 1.1.2
