Analyzing the use of machine learning techniques in detecting fraudulent activities

Okolo, Joy Nnenna and Adeniji, Samuel A and Onwuegbuchi, Osondu and Sanni, Samira (2025) Analyzing the use of machine learning techniques in detecting fraudulent activities. World Journal of Advanced Research and Reviews, 26 (1). pp. 1198-1209. ISSN 2581-9615

Fraudulent activities have become a growing concern across industries such as finance, e-commerce, healthcare, and cybersecurity, necessitating the adoption of advanced detection mechanisms. Traditional rule-based fraud detection methods are increasingly ineffective in countering the evolving strategies of fraudsters. This paper explores the role of machine learning (ML) techniques in enhancing fraud detection capabilities, leveraging data-driven insights for more accurate and adaptive fraud prevention. The study categorizes ML approaches into supervised, unsupervised, and reinforcement learning methods, each offering distinct advantages in identifying fraudulent patterns. While supervised models rely on labeled datasets for classification, unsupervised techniques excel in detecting anomalies in unlabeled data, and reinforcement learning dynamically refines detection strategies based on real-time feedback. The paper also examines emerging hybrid frameworks that integrate ML with rule-based systems to improve accuracy, interpretability, and scalability. Despite the promise of ML-driven fraud detection, challenges such as data imbalance, model explainability, and regulatory compliance persist. Additionally, advancements in AI, federated learning, and blockchain technology present new opportunities for enhancing fraud detection while ensuring data privacy and security. This conceptual study provides a comprehensive analysis of ML applications in fraud detection, offering insights into current trends, challenges, and future directions for AI-driven fraud prevention strategies.