We take a deep dive into the place where human trafficking, slavery, and e-commerce fraud meet. In part one of of our discussion with Aaron Kahler, Founder and CEO of the Anti-human Trafficking Intelligence Initiative (ATII), we talk about the ecosystem of human trafficking and how criminals use fraud to pass money through the system.
Contact Aaron: Aaron@followmoneyfightslavery.org
Links:
- Main webpage
- ATII LinkedIn (please like and share!)
- Red Flags and Indicators Applicable to Sex Trafficking & Forced Labor
- ATII Video Library
- Anti-Human Trafficking Retail Consortium Membership Flyer
- Other ATII Downloadable Resources
- Full link tree
About the ATII:
The combination of the ATII team, along with the resources from our many important strategic partners has proven to be successful in combating labor and sex trafficking by hitting slave profiteers where they’ll hurt most. We do this by sharing information and reporting activity to combat human trafficking through our relationships with the cryptocurrency community, regulatory officers and law enforcement personnel. We aspire to bring necessary change in the approach to trafficking prevention, detection, reporting, and collaboration to achieve social justice and save lives by disrupting the illicit economics of human trafficking.
Bradley Chalupski: Hey everyone. This super Bradley Chalupski, co-founder and editor-in-chief at MerchantFraudJournal.com. In this episode, we’re going to be doing something a little bit different but that I am extremely proud to be able to bring you as a publication. We’re going to be speaking with Aaron Kahler. He’s the founder of the Anti-human Trafficking Intelligence Initiative. And we had a far-ranging discussion about how e-commerce fraud and human trafficking and slavery intersect. It was absolutely eye-opening for me. I think, of all the episodes that we’ve done, this is, for sure, the most important, but also one of the most enjoyable conversations that I’ve had. I really hope everyone listening will take the time to get informed about this issue. It’s something that goes on in the shadows of our community that we are empowered to be able to make even a small dent in suffering that is still going on in our world today from human trafficking. Hope you listen to the whole episode, I’ll be releasing it in two parts. This one will be the first half of the conversation and will be an informative discussion about how the world of human trafficking works. And then in the second episode – which I’ll be releasing subsequent to this one – we’ll get into a lot more of the tips and tricks and actionable items that you can use once you know how to identify what’s going on to actually prevent this type of activity at your e-commerce store. Thank you so much, Aaron, for coming on the podcast. And if you have any questions, please feel free to reach out – either to us or to him – for more information. And as always, you can get all the latest merchant fraud tips and tricks at MerchantFraudJournal.com.
Bradley Chalupski: Aaron, thanks so much for being with us.
Aaron Kahler: Absolutely. Thank you for having me.
Bradley Chalupski: So, this is going to be an absolutely incredible episode. I am so excited, I guess, is the word I’ll use. Although obviously, I wish we didn’t have to do episodes like this. But tell everyone who you are, where you’re from, who you represent. And then we’ll take it from there.
Aaron Kahler: Mame is Aaron Kahler. I am the founder and CEO of the Anti-human Trafficking Intelligence Initiative. We call ourselves ATII or Team ATII. I’m from New York originally, spent most of my career in Manhattan, and am now located in North Carolina for the last six years or so. We’re a nonprofit organization dedicated to eradicating human slavery, modern slavery, human trafficking, child exploitation, and child sexual abuse material through disrupting networks and applying data technology, and advanced analytics and intelligence to the problem as a whole.
Bradley Chalupski: Just doing amazing work. And thank you so much for coming on the podcast to help us shine a light on this terrible, terrible subject that really needs all the attention that it can get. And the reason that we connected was because on a previous podcast, I spoke with Rich Stuppy from Kount. And he was talking about the connection between fraud and human trafficking. And it was something that even having been in the industry for quite a long time now, I had never really thought of it that way, quite frankly. We’re very caught up in business imperatives here. Some personal security and people’s identities getting stolen, but this is a whole nother level of crime. I would even dare say that versus stealing money, it’s just not in the same category to me. The thought that terrible human being, criminals, are using fraud and e-commerce fraud to perpetuate their crimes just always haunted me. And that’s why I actually just reached out to you on LinkedIn. And I really appreciated you responding to me to just the cold LinkedIn message, which I think the hit rate on those is pretty low. So, I was really excited when you responded. And I just thank you so much for coming on here. And I’m really happy that we’re able to delve into this topic more. And I hope everyone out there who works in fraud prevention that’s listening to this, listen to this entire episode, it’s so important. It’s such an important topic and such a good deed that we can do as a community to make even the slightest impact on this type of thing. So, thank you so much, Aaron, for coming on. I really, really appreciate it.
Aaron Kahler: Thank you. It’s my pleasure – being able to speak to your listeners and use this platform to build awareness around anti-human trafficking and what actual organizations, corporations, and the folks working in fraud and investigations, and risk, and compliance can do on their end and be aware of is something that is a big part of our mission and of our message. And as far as LinkedIn goes, my LinkedIn box is a warzone. It’s a full-time job – just going through LinkedIn messages – for folks in this industry and others. I saw your message and having a platform like this to spread the message on and awareness is something that I couldn’t ignore. So, thank you.
Bradley Chalupski: Our pleasure, really. So, let’s start at the beginning and talk about the ecosystem of human trafficking and slavery generally, because certainly, I don’t know much of anything about it. I know that it exists, but it’s not something that touches my everyday life, my everyday thoughts. So, our listeners, before we delve into what they can do to help, I’m sure many of them would just need the 30,000 foot or maybe 10,000-foot overview of how this still goes on in 2021, in some kind of systematic way, not even just in pockets of the world, but literally systematically. Please explain that to us.
Aaron Kahler: So, I’m going to start off this explanation by saying, number one, I am not an expert in human trafficking. I’m not a survivor, I’m not a victim, I’m not somebody that is a true expert or somebody that studied for this. I have 20-plus years of experience in financial crime, regulatory compliance, fraud management, risk advisory, and so forth. And I saw discrepancies, I saw what lapses in compliance, best practices, regulations, and investigation in how the commercial industry and financial institutions were doing a lot around other financial crimes and not enough around trafficking. And two years ago that made me explore this further and use my background, network, experience, and so forth to start the nonprofit organization. So, I just wanted to start off by saying that. There are many organizations, groups, NGOs, and experts that are more qualified to give you the background on what human trafficking is, what it means, and so forth. But that being said, I will respond the best I can. Human trafficking as a whole, and especially from the financial perspective, is one of the very close to the most lucrative crimes – from a criminal organization or an individual perspective – that somebody can get involved with if they’re looking to make money through crime. And drug trafficking is likely number one.
Aaron Kahler: But if all the poppy fields in Afghanistan, and the cocoa and cocaine being developed and marijuana in South America and other countries, was to go away tomorrow; human trafficking and the exploitation of people would be the number one source of generating criminal income. You can take a drug once that’s produced, but you can use the person many, many times a day on a daily basis. There’s no production, there’s no growing, there is something called grooming. There are many types of human trafficking exploitation of people. It isn’t just taking people, kidnapping them, smuggling – although that is a way that that trafficking can occur. But the most common way in which it occurs has to do with grooming people – finding, locating, identifying, working, talking to, exploiting, and understanding vulnerabilities of vulnerable people is the main source. So, whether it’s individuals that are in other countries, in poor villages and so forth, that are looking for an escape, their families are looking for money, they’re being offered opportunities to leave their village, leave their family, to earn an income for themselves and their family. And exploiting that, and not allowing these people to do the jobs and things that they’re promised to, that’s an aspect of exploiting the vulnerable. When it comes to online grooming and reaching out to younger people, or even adult people, and building a relationship, getting them to trust you, understanding their fears, what they want, what’s going to shame them, and getting them to bend to your will.
Bradley Chalupski: I want to take this whole process – if that’s what you would call it – from start to finish in maybe a theoretical case to really give it a concrete feeling. What I’d like to do, if we can start with a grooming scenario, how that would work and what that would look like? And then once we get to a certain point, where the money starts to come in?
Aaron Kahler: For the listeners here, some of this can be a little bit disturbing, and I’ll try to be sensitive in how I describe. First, I’ll say that picking one scenario doesn’t do justice to all the other scenarios and ways. There are hundreds of thousands of ways in which people are trafficked, exploited, and so forth. But for these purposes, I’ll describe a scenario that, I think, will appeal to mothers, fathers, professionals, and family members that are listening out there. So, starting from social media – Facebook, Instagram, or whatever you use – somebody that’s looking to traffic somebody, and it doesn’t have to be a criminal network, it doesn’t have to be organized crime, it could be a one-off person that is looking to exploit one person or has a small group of people that they’re exploiting and found. They identify a girl or a woman. We’ll say a girl, a younger girl in high school. They identify someone that they’re interested in. And they’ll do that by just looking at social media, seeing what they think they’re interested in, and trying to figure out their vulnerabilities. They hone in on this person. They start building and making relationships with this person. They can present themselves as a man, a boy. They can present themselves as a friend. They can present themselves and set up a profile with a picture and presence of a girl that they are already trafficking or working with.
Aaron Kahler: A lot of times they may they may befriend person that they’re looking at, build a relationship with them, and convince this person to meet them out, and say, “Hey” – representing themselves as a woman – “We want to go out. Let’s go to the club. Let’s go to the bar. Let’s go somewhere. We’ll be able to get you in if you don’t have ID. Don’t worry about money, we got it. We just want to hang out.” They’re going out with with the impression that they’re hanging out with maybe a girl slightly older, cooler, has money, has means, by them drinks, buy them gifts. If it’s a long-term relationship, build trust and introduce them to the trafficker or the pimp. Lay guilt or lay shame; “We bought you all these drinks, we bought you these gifts you; you owe us you.” And once you get them out of their comfort zone, drugs can be involved – getting in a hotel and dragging somebody for a couple of days, forcing them to do things and break their will that they don’t intend to do. People do this, they go back home, and still live their normal life – going to school, going to practice – but their will has been broken. And they don’t want their parents, they don’t want their friends and family, they want life to be normal. So they continue to work for the trafficker and do what they tell them to under threats. Sometimes they get them addicted to drugs and things, and they don’t go home, they stay with the trafficker.
Aaron Kahler: Over the course of time, this person can maintain being somebody that’s used and exploited traffic for sex after it’s done a period of time, whether they stay involved. They may graduate or grow into a different position where they’re not just doing it but they’re going out functioning the same way they were recruited and recruiting other girls to bring into the fold.
Bradley Chalupski: So, it sounds like you’re presenting a scenario where you have vulnerable people online, they’re approached in an organized, systemic, strategic way, where they now feel that they need to act in a way that is subservient to the trafficker.
Aaron Kahler: I mean, give or take some details, it can occur in a lot of different ways. It can be very opportunistic, in that somebody maybe just online looking and trying to build relationships and just having a one-time thing. And then they get into this relationship with this person that they can exploit. They may not have thought that they would become a trafficker or do this to somebody, but the opportunity was there and they were empowered to do it. So, there’s a lot of different scenarios and situations. But to your point, that is an accurate representation of something that can and does happen.
Bradley Chalupski: So, talk to me about the money trail here. As much as I hate using that phrase, in this context, I think it’s appropriate. What is the strategy on the part of these traffickers to try and profit off the exploitation. Take us through where that type of activity will appear to our audience when they’re sitting at work?
Aaron Kahler: So, like any financial crime, there’s a lot of different ways in which payments are made and operations are run. When it comes to trafficking and sexual exploitation in more direct peer-to-peer type ways, gift cards are a huge factor in which payments are processed for trafficking and child sexual exploitation; purchasing gift cards in certain amounts to used to pay to avoid detection, and so forth.
Bradley Chalupski: So, we have a scenario where somebody has gained the trust of someone that’s vulnerable, they are now in a position to exploit them financially. What are the types of crimes that are being committed here? So, you mentioned, sex trafficking, which I assume you mean things like webcams, different pornography sites, places like that. Are there other types of places where payment is going through the money system to exploit these victims?
Aaron Kahler: Yeah. Massage parlors, there are a lot of online sex ad sources. And our organization scrapes illicit sex sites, massage parlor sites, and forum sites to find these sex ads and investigate them. Restaurants and other types of retail organizations that may be dealing in other types of trafficking, like labor trafficking.
Bradley Chalupski: I want to dive into these. When these businesses are operating, are they operating on a cash basis? Are they operating on a card basis? You mentioned gift cards. How is the money moving through this system?
Aaron Kahler: So, I’ll give a couple of scenarios here. One thing we do, like I mentioned, is we scrape illicit sex sites. In doing that, we’ll find, sometimes, links and mentioning of how they’d want to be paid. They may reference certain companies, retail organizations where they would like to have a gift card from. Typically, what we see is the gift card request or financial request is usually in a pretty similar amount of about $60 when it comes to paying for sex. In ads you can see a reference to a gift card and what they’re looking to be paid in. You can see references to money service businesses or companies that are alternative payments methods. I’m trying not to name the names of organizations that we may work with or maybe helping or something along those lines. Many times, they’re indicating how they may want to be paid. If that’s not indicated – which oftentimes, it’s not, if it’s a business – you’ll see, there might be a sex ad, and it may not even mention the fact that it’s a massage parlor or some business. But then when we scrape the site and we get the telephone number and email address or something, cross-referencing, a reverse searcher of some sort, we see that “Okay, this is a massage parlor. Oh, this is a nail salon. It’s not an individual.” Through that cash credit card, however that massage parlor or other business typically operates, they’re accepting payments that way.
Bradley Chalupski: So, you mentioned a little bit the characteristics of these payments. I think this is a crucial, crucial point for our audience. Can you give me as much detail as you can or are willing to give about some of the characteristics of these payments that people on our end of the fence will see data science that goes into trying to find specific patterns. And then also be human fraud analysts that will look at these orders when they fall into a gray area where the algorithm may or may not be certain based on the level of risks that you’re willing to tolerate, etc, but there’s a human looking at it.
Aaron Kahler: So, first of all, I’ll say that there are a lot of different ones, some of them cross between multiple industries – many of them do – from a visual to a transactional pattern to different types of habits the way people that are being exploited or are doing the exploiting transact. We have a red flags document that I’ll provide you that you can put in the notes for your viewers that cover a lot of these things in a number of different industries. There’s banking, there’s cryptocurrency, there are retail flags, there are hospitality flags, there are payment processing flags. A couple of things to be mindful of, in general, if you have access to look at it, that $60 amount is something that is often related to gift cards. Transactions occurring at late to morning hours for a business that wouldn’t normally operate at that time is a flag. When it comes to online retailers and folks that are selling things online and shipping them out, a lot of times the purchases will be made for businesses. So, it’s a certain type of business, and they’re ordering bulk condoms, bulk feminine products, different things that can correlate to, “Hey, why would this business be ordering this in bulk and having this?”
Aaron Kahler: There’s a lot of common sense types of flags. And I know that’s easy to say and doesn’t give your readers a lot of understanding. But it really is common sense when you look at your KYC, you know your customer, you know your client, you know the business, and look at it through that lens, it makes a lot of sense. There’s a lot of content, a lot of flags that that can be applied to different industries and looked at. It’s really going to be based on who’s looking at it, and what types of access algorithms and so forth. So, financial institutions, whether it’s banks, whether it’s crypto, whether it’s a money service business, whether it’s a payment processor, they have different regulatory requirements, compliance expectations, best practices and procedures. In comparison to online retailers and so forth, you’ll see the algorithms, the rules, the amount of due diligence that needs to go into understanding your customer, it’s like night and day. Financial institutions are required to do this stuff in a significant way, which yields more investigations and opportunities. Other industries do not have the same regulatory burden and mandate, and many of them don’t do much. Lots of them do do above and beyond just working with law enforcement and responding to subpoenas and legal requests. There are a few that we work with that we consider best practices, best case scenarios in which they’re meeting their mandate and then doing more even though they’re not required to. That being said, there’s so much more that we can bring if these organizations are to work more proactively around preventing human trafficking and exploitation as opposed to just reactively when law enforcement or somebody comes knocking at the door to ask questions.
Bradley Chalupski: I have a couple of follow-up questions from what you just said. The first one is, I want to make sure that we also touch upon systematic flags. So, a lot of times in our industry, you will have individual orders, data points that are important to the algorithm. But many times on this podcast, and in general, people have spoken about, it’s not just that you see one order, it’s that all of a sudden, you notice there are a lot of orders coming from a certain area. And you need to be looking out for that as well. So, you gave some individual level, at a systematic level, when these organizations are operating, I understand that sometimes it might just be an opportunist, a one-off person. But when you’re talking about organized crime rings that are doing these types of things, is there any kind of broader systematic shift that people can be looking for in the transactions that are running through their store?
Aaron Kahler: You’re talking online stores or retail physical stores?
Bradley Chalupski: Either one, online or retail. Any red flags that would go on that people would be able to notice at any level.
Aaron Kahler: I’m going to talk about gift cards because I’d like to tell your listeners about a lot of the unique work we’re doing and growing to do in gift cards. So, retails, when it comes to gift cards, whether you’re purchasing them online – which is a whole other beast in and of itself – or whether you’re purchasing them in a store, gift cards being purchased in large amounts frequently by common individuals, like a victim or a potential trafficker. When organizations are actually taking telephone numbers, email addresses, and other information, being able to recognize that this telephone number, this email address, whatever is being collected; if the organization does that, that really links together a transactional pattern that can be looked at later within systems. Like I said, the gift cards being purchased in $60 increments, that would be something that a John would do, somebody that’s looking to purchase. So, if regularly a telephone number, email address, or name, whatever is being collected gets linked to a person that three weeks or several times a month is purchasing a $60 gift card, that’s a good indicator that they’re just a normal guy that’s going out and looking to purchase sex. And then whether that sex they’re purchasing is related to human trafficking or to just normal prostitution is a whole other thing. But something to be mindful of, either way, gift cards being purchased in large amounts in cash. Anytime cash is paid for gift cards, and it’s not just a one-off, that’s a flag that should be considered. Not just a flag for trafficking, but could be a flag for a lot of different financial crime; being purchased in large frequencies, like I said, with names and telephone numbers; being purchased by females, ages 15 to 30. If you’re a cashier or somebody working at a store and you have females at a younger age coming in and buying multiple gift cards more than once, that should be a red flag, that’s something that you think about and look at as somebody that’s a teller or somebody working in a store.
Aaron Kahler: And then you get into the second phase of using common sense; how does this girl have the money or whatever to do this? What does she look like? Does she look like she’s on drugs? Does she look strung out? Does she look like she’s being coerced by somebody? Does she look afraid? Will she not speak? Is it awkward? Those are red flags that may give you an inclination and may make you want to call somebody or report something, that’s a simple few examples.
Bradley Chalupski: And maybe can we go into online as well? I want to make sure that we touch all the bases here. The online world, I’m sure it’s much more difficult because it’s anonymous and there aren’t these physical body cues for people to pick up on. But is there a pattern here that would distinguish it from other types of fraud that might go on? And if so, how do you separate the signal from the noise?
Aaron Kahler: So, sticking with gift cards, e-gift cards are a particular area of concern. Now, you can purchase them immediately online at any given time, and you can send them to whatever email address you want. So, you can use fake guest accounts, names, numbers, different things, open email accounts specifically to do this, which makes tracing very, very difficult. And based on the maturity of the organization and the systems in which they’re operationally selling these could be almost completely autonomous in doing that. And then also oftentimes, e-gift cards are purchased and then sold to different web websites, allowing traffickers to collect cash for gift cards and so forth. So, the traffickers may be accepting gift cards physically from the John’s that the John’s give it to the girl, the girl gives it to the trafficker. They get a ton of gift cards and then they’re selling them back to online retailers that sell gift cards as a repository of gift cards. And obviously, they can get paid for doing that. And then the site can sell it separately, but also that prevents them from having to go into a store, maybe buy something, and then return it to get the cash back. So, allowing them to sell it off is a deterrent for them physically having to find a way to monetize that gift card and get back cash or something out of it.
Bradley Chalupski: I also want to go into it. I feel like now we’ve covered the most direct way that the money is flowing through organizations that our listeners can be on the lookout for. I’m also interested to hear what you have to say about the idea of these organizations laundering money through legitimate businesses. And what I mean by that is I can envision scenarios where if I am taking in a bunch of money in a sex trafficking ring, and I want to somehow clean this money.
Bradley Chalupski: That’s it for part one of the conversation with Aaron. Thank you so much for listening. Be sure to check out the show notes where you’ll get all the information that was provided to us by the Anti-human Trafficking Intelligence Initiative, so that you can do everything you can to make a dent in this important topic. Tune in next time for part two, where we’ll go even more in-depth into what you can do to prevent these types of crimes when you see them. Take care everyone.