The Online Sex Trafficking Economy: Past, Present, and Future

Written by Mackenzie Martinez

In the past few decades, the acceleration of technological advancement has truly challenged the boundaries of human capability. Advances in medicine, education, infrastructure, finance, and various other realms have positively reimagined society and improved our quality of life in many ways. Unfortunately, digital advances give way to increasing opportunity for exploiting technology for crime. Human trafficking, specifically sex trafficking, has thrived in an online environment.

This blog gives a brief overview of how the internet has played a role in trafficking in the past, how human traffickers exploit the internet to benefit their trade, and why online economics have caused such a surge in web-based sex trafficking. Note: all the information in this post comes from Louise Shelley’s “Human Trafficking and the International Financial System,” which can be found here (link).

Photo Credit: Mikhail Nilov

Evidence of a Large Trafficking Market

The scale and the proceeds of human trafficking have changed profoundly since the early 2000s. Evidence of this is provided by a major United States government-funded computer research program on human trafficking conducted by DARPA (Defense Advanced Projects Research Agency), part of the Department of Defense. Computer scientists developed a tool, known as Memex, that mines the deep web for advertisements on sexual services.

Their data mining, which goes back to the early 2000s, demonstrates the immense scale online trafficking operates on. For example, in one two-year period, between 2014 and 2016, researchers reported in “Scientific American” that about $250 million were spent on posting more than 60 million web advertisements for commercial sexual services. The size of the advertising budget alone reflects the magnitude of the “business” as advertisements are only a share of a business’s expenses or its profits.

Past Trafficking Mechanisms: Craigslist and Backpage

Money from online advertisements were found to go, in part, to the internet platforms that posted them. One of the most popular sites was Craigslist, whose revenue from ads in 2010 were estimated at $36 million. Its adult services section was shut down after mounting pressure from activists and state attorney general.

The downfall of Craigslist led advertisers of adult services to migrate to Backpage, which then became the predominant player in the marketing of sexual services. This public online marketplace differed from Craigslist as most of the website’s money was generated specifically through the posting of escort and massage advertisement. In other words, Backpage more freely advertised its adult services sections. Backpage was shut down by federal authorities in April 2018 shortly before the FOSTA-SESTA legislation was passed. The Stop Enabling Sex Traffickers Act (SESTA) and Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA) ended the ability to legally place advertisements online for sexual services.

In the month before it was shut down, Backpage posted over 133,000 advertisements for sexual services. One recent federal case utilized a Backpage advertisement in San Francisco along with Memex to construct a complete criminal network and supply chain. The key node was traced all the way to China, resulting in seven Chinese nationals being indicted in November 2018. Their trafficking network had 30,000 customers, 500 web domains that were linked to an additional 350,000 escort advertisements, and fifty-five websites. According to the indictments, the “Supermatchescort” network operated in fifty-eight cities throughout the United States, Canada, and Australia.

Today’s Major Trafficking Trends

Within a month of the passage of the FOSTA-SESTA legislation and the censoring of Backpage, mining organizations reported that advertisements for commercial sex plummeted eighty-two percent. However, after four months, the numbers of advertisements jumped back to seventy-five percent of their daily volume before Backpage was censored. Some analysts believe many advertisements have merely shifted since 2018, to platforms hosted on servers outside the reach of the United States and not subject to the new legislation. Therefore, the money is going into the global financial system but not to American-based advertisers and web-hosting services.

The online economy and communications industry have become key to the activities of human trafficking for sexual exploitation. Today, the hosting of websites and the placement of advertisements involves many companies, including GoDaddy and T-Mobile according to New York City Prosecutor Cyrus Vance. Providers of housing and rental networks, such as Airbnb, have also entered the new online trafficking economy; temporary living sites are rented and then exploited by human traffickers.

Vance suggests that because obtaining information from some of the businesses in this sector can be slow or difficult, money service providers are still a significant piece of the puzzle. As Vance testified, “They pay to arrange transportation for their victims, pay members of their operations, and move their ill-gotten gains abroad to countries like Russia and China in the blink of an eye… Traffickers also commonly launder money by opening multiple business accounts at different banks, as well as transferring checks and cash between accounts to cover their tracks.”

Photo Credit: Worldspectrum

Trafficking of the Future: The Impact of Cryptocurrency

The cyberworld, through cryptocurrency, has assumed an important part of the financial system of human trafficking in the past couple years. This has been documented in both criminal investigative practice as well as cutting edge computer science research. Primarily, Bitcoin is used to help run the human trafficking business. As Vance commented from the investigative perspective, cryptocurrency is not used to pay for sexual services. “Instead, the most significant impact of these currencies in sex trafficking investigations has been their role in the online economy.”

The volume of online advertisements and memberships, alongside the drastic increase in the value of digital currencies such as Bitcoin, has caused the profits of those who operate websites that facilitate both the supply and demand side of the sex trafficking economy to skyrocket. “Over the last year, the increase in the value of Bitcoin has generated several million dollars in profit for one popular review site.” Aside from cryptocurrency increasing the economic gain of traffickers, it is also highly untraceable by nature, which aids in the concealment of criminal activity.

As history has demonstrated, technological advancement coincides with the evolution of criminal tactics. Perpetrators of trafficking do an excellent job of exploiting what is new to decrease their chances of being caught by law enforcement. It is vital that criminal databases be constantly updated as to keep up with the patterns of trafficking activity and ensure trafficking is recognized by businesses. The Anti-Human Trafficking Intelligence Initiative (ATII) maintains an expansive database that financial institutions may utilize to detect perpetrators of human trafficking using their services. See our website for more information on how to contact us for potential partnerships.