Use of Data Mining in Fraud Detection
Use of Data Mining in Fraud Detection
Focus on ACL
Hofstra University
Abstract
This paper explore how business data mining software are used in fraud detection. In the paper, we discuss the fraud, fraud types and cost of fraud. In order to reduce the cost of fraud, companies can use data mining to detect the fraud. There are two methods: focus on all transaction data and focus on particular risks. There are several data mining software on the market, we introduce seven steps to introduce how to use ACL, one of the leading software, to help the organizations prevent and detect fraud more effectively.
Keywords: Fraud detection, Data mining, ACL software
Use of Data Mining in Fraud Detection
Focus on ACL Introduction
Introduction
Before discussing how business analytic software tools are used for fraud detection, it is important to identify the definition of fraud, cost of fraud, fraud detection and etc.
Occupational Fraud
The types of fraud that will impact the companies differ a lot. In the Report to the Nations on Occupational Fraud and Abuse issued by Association of Certified Fraud Examiners (ACFE) (2014), it identified a particular one: occupational fraud that is defined as: “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.” ACFE (2014) concluded that “Put more simply, occupational frauds are those schemes in which a person defrauds his or her employing organization. By its very nature, this form of fraud is a threat to all organizations that employ individuals to perform their business functions.”
The Cost of Fraud
According to the ACFE’s (2014) Report, it estimated that the fraud costs the representative about 5% losses of revenues every year. Using this to the estimated GWP (Gross World Product) in 2013. We can get that potential fraud may bring the losses of almost $3.7 trillion one
Focus on ACL
Hofstra University
Abstract
This paper explore how business data mining software are used in fraud detection. In the paper, we discuss the fraud, fraud types and cost of fraud. In order to reduce the cost of fraud, companies can use data mining to detect the fraud. There are two methods: focus on all transaction data and focus on particular risks. There are several data mining software on the market, we introduce seven steps to introduce how to use ACL, one of the leading software, to help the organizations prevent and detect fraud more effectively.
Keywords: Fraud detection, Data mining, ACL software
Use of Data Mining in Fraud Detection
Focus on ACL Introduction
Introduction
Before discussing how business analytic software tools are used for fraud detection, it is important to identify the definition of fraud, cost of fraud, fraud detection and etc.
Occupational Fraud
The types of fraud that will impact the companies differ a lot. In the Report to the Nations on Occupational Fraud and Abuse issued by Association of Certified Fraud Examiners (ACFE) (2014), it identified a particular one: occupational fraud that is defined as: “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.” ACFE (2014) concluded that “Put more simply, occupational frauds are those schemes in which a person defrauds his or her employing organization. By its very nature, this form of fraud is a threat to all organizations that employ individuals to perform their business functions.”
The Cost of Fraud
According to the ACFE’s (2014) Report, it estimated that the fraud costs the representative about 5% losses of revenues every year. Using this to the estimated GWP (Gross World Product) in 2013. We can get that potential fraud may bring the losses of almost $3.7 trillion one
References: Association of Certified Fraud Examiners (ACFE). (2014). Report to the Nations on Occupational Fraud and Abuse Mudit Gupta. (January 2007). Data Analysis: Tools and Techniques - Reducing the Time Needed for Fraud Detection. The newspaper of the NYSSCPA. Vol. 10, No.1. http://www.nysscpa.org/trustedprof/107/tp10.htm John Verver. (April 10, 2014). The Enemy Within: Stopping Employee Fraud. Global Banking & Finance Review. Retrieved from: http://www.globalbankingandfinance.com/the-enemy-within-stopping-employee-fraud/ Elspeth Wales. (May 2003). Is it Worth Investing in Software to Combat Fraud? Computer Fraud & Security. Volume 2003, Issue 5. 6-8.