Call-Based Fraud Detection in Mobile Communication Networks Using a Hierarchical Regime-Switching Model

Fraud causes substantial losses to telecommunication carriers. Detection systems which automatically detect illegal use of the network can be used to alleviate the problem. Previous approaches worked on features derived from the call patterns of individual users. In this paper we present a call-based detection system based on a hierarchical regime-switching model. The detection problem is formulated as an inference problem on the regime probabilities. Inference is implemented by applying the junction tree algorithm to the underlying graphical model. The dynamics are learned from data using the EM algorithm and subsequent discriminative training. The methods are assessed using fraud data from a real mobile communication network.