At Uber Freight, our team of highly experienced fraud investigators make it their mission to protect our customers’ shipments against malicious activities like identity cloning and pilferage. They’re tasked with having a deep understanding of the fraud landscape as it evolves—and sharing strategies for avoiding bad actors with everyone in the Uber Freight network.
As supply chain networks move online, theft operations are growing more sophisticated. Estimates say reports of fraud have jumped 400% in Q4 2022 from the same period the year before. Impersonation scams and fake offers exploiting supply chain disruptions have become prevalent.
Criminal groups are targeting loads by strategically leveraging social engineering tactics and artificial intelligence (AI) tools. Bad actors are engaging with logistics personnel through online platforms, posing as a credible carrier or broker—known as phishing. From building pseudo websites to using fake names and email addresses, we’re seeing a rapid growth in digital identity cloning. Identity theft has also led to the manipulation of electronic records—such as the changing of destination details and delivery schedules, or even submitting fictitious orders—giving criminals the ability to misdirect shipments, facilitate unauthorized stops, and take some (if not all) of the cargo for their own monetary gain.
The rapid digitization of supply chains isn’t the only driver of these new fraud trends. Natural disasters like hurricanes and wildfires are opening up unexpected windows of opportunity for bad actors to take advantage of last-minute route changes and confusion.
With advancing technology and extreme weather events rising in frequency and intensity, logistics companies must have a game plan in place to protect goods in transit.
Digitization of freight may have opened the door to new forms of fraud, but it is also arming companies with an unprecedented level of data-driven visibility across their operations—and, ultimately, helping them find fraudsters faster.
Alexis Watkins, Senior Manager, Carrier Risk and Compliance at Uber Freight, discussed how businesses can make the most of their data at a recent webinar on the topic.
“Information is key,” said Watkins. “That means leveraging any and all internal and external data sources available to create a robust overview of user identity and behavior.”
To ensure supply chains are fraud-proof, logistics companies should establish baseline user behavior patterns by continuously analyzing order processing, carrier profiles, shipment tracking, and financial transactions. User behavior analytics should also extend beyond transactional data to include access patterns within internal systems. Monitoring login times and access permissions can reveal anomalies indicative of unauthorized access or suspicious behavior.
Logistics teams can then implement real-time monitoring systems to track deviations from the norms. For distribution centers, license plate readers and high-quality security cameras are a must. Thresholds for KPIs can be set to define what constitutes a deviation, too. If a data point falls outside these predefined thresholds—such as unexpected detours, sudden communication breakdowns with the carrier, payment irregularities, or discrepancies in documentation—an alert can be triggered for further investigation.
As logistics leaders leverage real-time data, they should also keep an open channel of communication with other stakeholders in the industry and continuously relay their findings. Fostering collaboration across a national network of shippers and organizations strengthens the collective defense against fraud and theft.
Bill McDermott, who spent nearly 20 years working complex criminal investigations at the FBI, now serves as a Senior Investigator for Uber Freight. McDermott emphasized the value of collaboration in ensuring secure, efficient transportation.
“Sharing information doesn’t take away your competitive edge,” said McDermott. “No one—and I mean no one—can succeed if fraud continues to run rampant.”
Reporting to third-party organizations (like CargoNet and TIA Watchdog), as well as local police departments about specific fraud events, helps spread actionable information across the entire industry.
Criminals often target multiple entities within a network, and a collective awareness about these potential threats allows for a more comprehensive response. By combining robust analytics, real-time monitoring, and collaborative efforts, shippers can promptly identify and mitigate fraud in their supply chains.
Freight fraud is a multifaceted challenge that can manifest at different stages of the supply chain. But, according to McDermott, most of these reported cases actually begin at the individual level.
Sales personnel, customer service representatives, and logistics operators often serve as the frontline of defense against bad actors. They work in a dynamic environment that requires a nuanced understanding of security threats. At the same time, however, they may not have access to comprehensive training on how to identify and respond to these risks. This knowledge gap can make them more susceptible to falling victim to organized schemes.
To empower individuals on the frontline, logistics leaders need to prioritize education and training initiatives. Practical exercises can help provide more hands-on experience in flagging suspicious carriers and brokers. Beyond formal training, companies should strive to create a culture of vigilance and open communication. Encouraging employees to report concerns, ask questions, and share insights can foster an environment where everyone feels responsible for the security of the supply chain.
Missed out on Uber Freight’s recent webinar with our resident fraud experts? Watch the complete recording here.