AFRAID: Fraud detection via active inference in time-evolving social networks

Fraud is a social process that occurs over time. We introduce a new approach, called AFRAID, which utilizes active inference to better detect fraud in time-varying social networks. That is, classify nodes as fraudulent vs. non-fraudulent. In active inference on social networks, a set of unlabeled nodes is given to an oracle (in our case one or more fraud inspectors) to label. These labels are used to seed the inference process on previously trained classifier(s). The challenge in active inference is to select a small set of unlabeled nodes that would lead to the highest classification performance. Since fraud is highly adaptive and dynamic, selecting such nodes is even more challenging than in other settings. We apply our approach to a real-life fraud data set obtained from the Belgian Social Security Institution to detect social security fraud. In this setting, fraud is defined as the intentional failing of companies to pay tax contributions to the government. Thus, the social network is composed of companies and the links between companies indicate shared resources. Our approach, AFRAID, outperforms the approaches that do not utilize active inference by up to 15% in terms of precision.