# Reinforcement Learning of Large Language Models for Interpretable Credit Card Fraud Detection

arXiv: https://arxiv.org/abs/2601.05578 · HTML: https://mlsanity.com/paper/2601.05578/

## Key facts

- Cited by 1 papers in the map (data through 14 Oct 2026).
- Builds on 17 of its 42 references that are in the map.
- First posted on arXiv 9 Jan 2026.

## Builds on (most cited first, 17 of 17)

- [Proximal Policy Optimization Algorithms](https://mlsanity.com/paper/1707.06347/) (2017)
- [DeepSeekMath: Pushing the Limits of Mathematical Reasoning in Open Language Models](https://mlsanity.com/paper/2402.03300/) (2024)
- [Qwen3 Technical Report](https://mlsanity.com/paper/2505.09388/) (2025)
- [Direct Preference Optimization: Your Language Model is Secretly a Reward Model](https://mlsanity.com/paper/2305.18290/) (2023)
- [Gemini 2.5: Pushing the Frontier with Advanced Reasoning, Multimodality, Long Context, and Next Generation Agentic Capabilities](https://mlsanity.com/paper/2507.06261/) (2025)
- [Understanding R1-Zero-Like Training: A Critical Perspective](https://mlsanity.com/paper/2503.20783/) (2025)
- [Group Sequence Policy Optimization](https://mlsanity.com/paper/2507.18071/) (2025)
- [GLM-4.5: Agentic, Reasoning, and Coding (ARC) Foundation Models](https://mlsanity.com/paper/2508.06471/) (2025)
- [From LLM Reasoning to Autonomous AI Agents: A Comprehensive Review](https://mlsanity.com/paper/2504.19678/) (2025)
- [Revisiting Catastrophic Forgetting in Large Language Model Tuning](https://mlsanity.com/paper/2406.04836/) (2024)
- [Reinforcement Learning for LLM Post-Training: A Survey](https://mlsanity.com/paper/2407.16216/) (2024)
- [On Designing Effective RL Reward at Training Time for LLM Reasoning](https://mlsanity.com/paper/2410.15115/) (2024)
- [The Optimal Reward Baseline for Gradient-Based Reinforcement Learning](https://mlsanity.com/paper/1301.2315/) (2013)
- [SEFraud: Graph-based Self-Explainable Fraud Detection via Interpretative Mask Learning](https://mlsanity.com/paper/2406.11389/) (2024)
- [Can LLMs Find Fraudsters? Multi-level LLM Enhanced Graph Fraud Detection](https://mlsanity.com/paper/2507.11997/) (2025)
- [When AI Agents Collude Online: Financial Fraud Risks by Collaborative LLM Agents on Social Platforms](https://mlsanity.com/paper/2511.06448/) (2025)
- [Advanced Real-Time Fraud Detection Using RAG-Based LLMs](https://mlsanity.com/paper/2501.15290/) (2025)

## Built on by (most cited first, 1 of 1)

- [Operational Evidence Gaps for LLMs in Fraud Detection and Trust-and-Safety Workflows](https://mlsanity.com/paper/2607.13078/) (2026)

## Abstract (arXiv)

E-commerce platforms and payment solution providers face increasingly sophisticated fraud schemes, ranging from identity theft and account takeovers to complex money laundering operations that exploit the speed and anonymity of digital transactions. However, despite their theoretical promise, the application of Large Language Models (LLMs) to fraud detection in real-world financial contexts remains largely unexploited, and their practical effectiveness in handling domain-specific e-commerce transaction data has yet to be empirically validated. To bridge this gap between conventional machine learning limitations and the untapped potential of LLMs in fraud detection, this paper proposes a novel approach that employs Reinforcement Learning (RL) to post-train lightweight language models specifically for fraud detection tasks using only raw transaction data. We utilize the Group Sequence Policy Optimization (GSPO) algorithm combined with a rule-based reward system to fine-tune language models of various sizes on a real-life transaction dataset provided by a Chinese global payment solution company. Through this reinforcement learning framework, the language models are encouraged to explore diverse trust and risk signals embedded within the textual transaction data, including patterns in customer information, shipping details, product descriptions, and order history. Our experimental results demonstrate the effectiveness of this approach, with post-trained language models achieving substantial F1-score improvements on held-out test data. Our findings demonstrate that the observed performance improvements are primarily attributable to the exploration mechanism inherent in reinforcement learning, which allows models to discover novel fraud indicators beyond those captured by traditional engineered features.