On: Machine learning for fraud detection

[jonawesomegreen]

This seems similar to what PayPal was doing in 2002. Its possible or even likely that PayPal's techniques have become stale over time, but they were doing some very advanced fraud detection in their time[1][2].

A really interesting book that detailed how the development of PayPals anti-fraud system came about (among other things) is Founders at Work[3].

[1] http://www.businessweek.com/stories/2002-09-30/max-levchin-o...

[2] http://www.quora.com/What-were-the-early-achievements-that-d...

[3] http://www.foundersatwork.com

[pc → jonawesomegreen]

As far as I know, PayPal never had the part of this that I'm most excited about -- straightforward UI and APIs for training the models over time. (Both so that they can be globally better and also better-adapted to each specific business.)

[icelancer → pc]

Exactly. The lack of transparency and developer openness was a huge problem for some of us. I really enjoy the steps forward Stripe makes in that regard across all facets of the business, to say nothing of the other reasons which I will stick with Stripe for a long time.

[driverdan → jonawesomegreen]

Paypal's anti-fraud software seemed to do something like this:

    if (rand() >= 0.5) {
        lock_account()
        freeze_balances()
        require_many_long_phone_calls()
        require_intrusive_amounts_of_scanned_documents()
        refuse_to_unlock_account_and_steal_account_balance()
    }

[crashoverdrive → jonawesomegreen]

Don't be confused. Paypal's Igor wasn't automatically detecting and taking action. See my comment. Max Levchin's original design failed.