Digital payment platforms are often praised for their convenience, but they are now under scrutiny in a recent study from the University of California, Davis, that reveals their potential misuse in facilitating drug dealing and other illicit activities.
The dark side of these platforms comes to light as researchers explore the intersection of digital payments and illegal drug markets.
An employee counts US dollar currency as a customer pays cash for an Apple iPhone 15 series phone for sale at The Grove Apple retail store on release day in Los Angeles, California, on September 22, 2023.
Drug Dealing on Digital Payment Apps
While they transform financial interactions, these digital payment apps underscore the importance of ongoing vigilance and the necessity for adaptive regulatory measures, according to Pantelis Loupos, assistant professor of marketing and business analytics at the UC Davis Graduate School of Management and co-author of the study.
"This study serves as a reminder to maintain awareness of our digital footprints and to engage with digital services responsibly," Loupos said in a press statement.
The study, titled "Social drug dealing: how peer-to-peer fintech platforms transformed illicit drug markets," scrutinizes 23 million transactions involving two million users over a two-year period using the expansive dataset from Venmo.
It uncovers that a minimum of 83,068 unique users participated in drug-related activities, utilizing emojis, words, or street slang associated with drugs. The research seeks to illuminate the implications of these findings for regulatory measures and individual responsibility.
The analysis differentiates between users who use the platform solely for drug-related transactions and those involved in various legal and illicit activities.
It identifies specific terms and emojis related to drug dealings, often coded to hide the true nature of the transaction. Emojis like pills or syringes and slang terms like "greens," "blues," or "shrooms" are used to represent different drugs.
The study uncovers coded language for quantities, such as using "pizza" to represent a kilogram of cocaine or "cupcakes" for a small amount of marijuana. Users employ euphemistic phrases like "pay for dinner" or "pitch in for gas" to mask their transactions' true nature.
Dual-Use Nature of Fintech Platforms
Loupos emphasizes that this study underscores how fintech platforms have a dual-use nature and showcases innovative ways these services can be co-opted.
Importantly, it offers law enforcement and regulatory bodies a more profound understanding of digital transaction patterns, contributing to the development of more effective countermeasures. The study emphasizes the evolving landscape of illegal drug transactions, intertwining with modern technologies and platforms.
"Our findings highlight the importance of distinguishing between these two types of illicit users and provide law enforcement agencies with valuable insights that can aid in combating illegal drug transactions in digital payment apps," the study's abstract reads.
The research team's findings were published in the Annals of Operations Research.
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