Leveraging mixture of experts and deep learning-based data rebalancing to improve credit fraud detection

Credit card fraud detection is a critical challenge in the financial sector due to the rapidly evolving tactics of fraudsters and the significant class imbalance betweenegitimate and fraudulent transactions. Traditional models, while effective to some extent, often suffer from high false positive rates and fail to generalize well to emerging fraud patterns. In this paper, we propose a novel approach that integrates a Mixture of Experts (MoE) model with a Deep Neural Network-based Synthetic Minority Over-sampling Technique (DNN-SMOTE) to enhance fraud detection performance. The MoE modeleverages multiple specialized expert networks, each trained to detect specific types of fraud, while the DNN-SMOTE generates high-quality synthetic samples to address the class imbalance. Our experimental results on a publicly available dataset demonstrate that the proposed method achieves a classification accuracy of 99.93%, a true positive rate of 84.69%, and a true negative rate of 99.95%. The Matthews Correlation Coefficient (MCC) of 0.7883 further highlights the model’s balanced performance in detecting fraudulent transactions. These results underscore the effectiveness of combining MoE with DNN-SMOTE, offering a robust solution for real-world credit card fraud detection scenarios.