Real-time fraud detection

- [Instructor] Have you ever been robbed…without even being aware of it?…A few years ago I was on vacation in Utah…and I got a call from American Express.…They wanted to know if I had just tried…to spend several thousands dollars on hotels…on the other side of the world.…I had definitely not done that,…so I was very glad that they caught the charge…before it went through and they turned it down.…We then reviewed a few much smaller charges…and found some others that I had also not made.…

American Express said they wouldn't charge me…for those fraudulent purposes, which was a big relief to me.…This was an example of fraud detection,…actually, real time fraud detection,…which is one of the most significant applications…of data science in economics and banking and finance.…Now, let's begin by stating the obvious question,…what is fraud?…Well, fraud is a deliberate deception…to secure unfair or unlawful gain.…And if you want more specific information,…the FBI describes 22 categories of fraud,…including these among others:…