Playing with Benford's Law

Abstract

Fraud has evolved from being committed by casual fraudsters to being committed by organized crime and fraud rings that use sophisticated methods to take over control of accounts and commit fraud. The problem is pronounced in the financial sector where the compromises are more sophisticated than in other industries. It is essential to get not only multiple sources of data to understand the entities being compromised but also apply sophisticated analytical methods to understand the data, extract optimal information, use high-end pattern recognition and text mining to create features, and advanced modeling techniques to fit the best possible models to the data to reduce false positive rates. The presentation discusses the challenges faced in fraud detection and how they can be addressed using sophisticated analytical techniques. 5

Application of Benford’s Law to the Tourism Demand: The Case of the Island of Sal, Cape Verde

“…Benford's Law can be defined as a collection of empirical evidence related to the frequency distribution of the leading digits in numerical data sets. The best-known version of the law states that in those data sets representing a collection of 'natural' data, the probability of seeing a particular digit in the first position is inversely related to its rank [24].…”