Improving Credit Card Fraud Detection through Transformer-Enhanced GAN Oversampling

Detection of credit card fraud is an acute issue of financial security because transaction datasets are highly lopsided, with fraud cases being only a drop in the ocean. Balancing datasets using the most popular methods of traditional oversampling such as the Synthetic Minority Oversampling Technique (SMOTE) generally create simplistic synthetic samples that are not readily applicable to complex fraud patterns. Recent industry advances that include Conditional Tabular Generative Adversarial Networks (CTGAN) and Tabular Variational Autoencoders (TVAE) have demonstrated increased efficiency in tabular synthesis, yet all these models still exhibit issues with high-dimensional dependence modelling. Now we will present our hybrid approach where we use a Generative Adversarial Network (GAN) with a Transformer encoder block to produce realistic fraudulent transactions samples. The GAN architecture allows training realistic generators adversarial, and the Transformer allows the model to learn rich feature interactions by self-attention. Such a hybrid strategy overcomes the limitations of SMOTE, CTGAN, and TVAE by producing a variety of high-quality synthetic minority classes samples. We test our algorithm on the publicly-available Credit Card Fraud Detection dataset and compare it to conventional and generative resampling strategies with a variety of classifiers, such as Logistic Regression (LR), Random Forest (RF), Extreme Gradient Boosting (XGBoost), and Support Vector Machine (SVM). Findings indicate that our Transformer-based GAN shows substantial gains in Recall, F1-score and Area Under the Receiver Operating Characteristic Curve (AUC), which indicates that it is effective in overcoming the severe class imbalance inherent in the task of fraud detection.