Fraud moves fast, particularly within industries that have historically moved slowly.
As legacy sectors like shipping, transportation and logistics begin to trade in the phones and fax machines for digital booking tools and other commercial platform innovations, they inadvertently open themselves up to new fraud and theft vectors as they start from scratch doing business online.
An alleged aircraft parts supplier, AOG Technics, for example, created an entirely fabricated history and employee base online to fool its buyers, including fake LinkedIn accounts and other bogus digital identities with pictures stolen from other sources including academic textbooks, Bloomberg reported Friday (Sep. 8).
Still, that’s not to say that the old, manually driven way of doing things was risk-free. It just means that players large and small operating in the industrial economy need to be aware that the same digital solutions they are using to streamline their workflows and optimize historically fragmented processes can also be leveraged by bad actors looking to take advantage of a wide-open digital playing field.
Small businesses without sophisticated protection could find themselves particularly vulnerable, especially as they generally have little margin to absorb the revenue lost to fraud and other illicit behavior.
It’s not just the industrial economy where bad actors are leveraging future-fit attack strategies like generative artificial intelligence (AI)-driven behavioral scams; the problem is one that nearly every industry is facing.
So, what are firms to do? Often, the best defense is a good offense. If an organization’s digital vulnerabilities are under attack, they need to erect digital defenses to protect themselves and proactively batten down the hatches, including by increasing transparency and efficiency during compliance and onboarding processes.
Read also: It’s Not Enough That Businesses Win — Fraudsters Must Also Lose
Supply chains are fragile and continue to ebb and flow, but digital booking tools and real-time visibility solutions are increasingly stepping up to the plate and helping firms control what’s controllable in this new ecosystem.
“These new tech innovations [being brought to market within the industry] are meant to organize an entire relationship that was previously unorganized, and where efficiencies slipped through the gaps,” Fernando Correa, CEO and co-founder of international digital trade company Cargobot, told PYMNTS in April.
However, the new normal comes with a new kind of fraud as scammers can place orders and create fake bookings using the same digital tools, among other disruptive attack tactics that while familiar, have been given a modern twist and scaled up.
For example, while double-brokering tactics have long been a fraudulent problem for the shipping sector, by using new digital marketplaces and bidding on loads with false identities, scammers can rapidly scale up and broaden their reach rather than relying on phone calls and other manual methods.
“The industry in fraud is shifting to real-time learnings because the fraudsters are now real time,” Shimon Steinmetz, chief financial officer at risk assessment and fraud prevention solution Vesta, told PYMNTS in August.
In cyberspace “you have something called a zero-day attack, which basically means you’re going to get attacked on day zero, and you’re going to be attacked before you even know what the solution is because the bad actors are way ahead of you,” Steinmetz added.
In order to properly defend themselves against today’s fast-moving, digitally deployed fraud, firms need to strike the perfect balance of tech-first defenses that protect against tech-first attacks, while simultaneously addressing the evergreen behavioral and tactical elements still lying at the root of most scams.
See also: The Industrial Economy Greets Generative AI With Open Arms
PYMNTS Intelligence found that companies relying on legacy and manual verification solutions lose above-average shares of annual sales to fraud, at 4.5%. However, firms using proactive and automated solutions, such as those powered by AI and machine learning (ML), typically reduce their share of lost sales to 2.3%.
That’s because AI anti-fraud tools are purpose-built to detect bogus middlemen and digital impersonators by leveraging behavioral contexts to identify and flag irregularities.
“Since I began to work in this industry, things have rapidly evolved,” Raz Ronen, CEO at FreightTech startup Wisor.AI, said to PYMNTS in June. “Five years ago, no one wanted to pick up your call or answer your email, now people are asking what is AI and how can it help.”
“It just makes a whole lot more sense to have AI solve that problem for you and do 90%, 95% of the work,” Constructor CEO and Co-founder Eli Finkelshteyn told PYMNTS in July.
Still, as Jordan Wagner, vice president and general manager at Torque by Ryder, told PYMNTS in a separate July interview, “the old channels are still very, very prevalent” within the industrial sector.
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