Plastic card fraud detection using peer group analysis

Peer group analysis is an unsupervised method for monitoring behaviour over time. For each credit card account a 'Peer Group' of accounts is determined; these are accounts that exhibit similar behaviour. As time evolves, it is assumed the behaviour of an account is tracked by those accounts in its peer group. An account whose subsequent behaviour deviates strongly from its peer group is considered to have behaved anomalously and is flagged as potentially fraudulent. This differs from traditional anomaly detection schemes which typically build behavioural profiles for individual accounts.