"What Is A Black Market"
How Black Markets Work
A black market is a transaction where goods or services are exchanged illegally. What makes the market "black" can either be the illegal nature of the goods and services themselves, the illegal nature of the transaction or both.
For example, while the buying and selling of food is not illegal, the transaction enters the black market when the good sold is illegal, such as foie gras in California. And while it's perfectly legal to sell hamburgers, when an all-cash restaurant does not remit to the state government the mandatory sales taxes on its transactions, it too has entered the black market.
Why Black Markets Exist
Black markets, also called shadow markets or dark web, come about when people want to exchange goods or services that are prohibited by governments. Black markets skew economic data, as transactions are unrecorded. Black markets also arise when people don't want to pay taxes on the transaction for legal or illegal goods or services. Some black markets exist simply because people don't realize there are laws they aren't following, such as bartering and not reporting the taxable value of the transaction, or hiring a regular housekeeper or babysitter but failing to pay employment taxes.
The licensing restrictions that governments impose on numerous occupations cause some workers to enter the black market because they don't want or can't afford to invest the time and money to obtain the required licenses. For example, in New York City, one must purchase a license called a medallion in order to legally operate a taxi business. These medallions cost hundreds of thousands of dollars, making them prohibitively expensive for most entrepreneurs. As a result, some people may choose to operate black-market taxis without a license – at least, until they are caught. Ride-sharing services like Uber or Lyft have further splintered the market for these types of businesses.
Sometimes participants in black markets don't want to act illegally, but because they lack the ability to work legally and need to make money, they don't report their jobs or income to the government. Such situations arise when illegal immigrants obtain jobs, when students traveling abroad obtain employment without acquiring a work visa or when children work in violation of minimum age requirements.
Black markets can also appear when government-imposed price ceilings create shortages. For example, if the government caps the price at which a grocery store may sell bottled water after a natural disaster, the store will quickly run out of water. Vendors will then likely appear selling water at the higher prices people are actually willing to pay. This secondary market is a black market.
Governments can also cause black markets through overregulation. An extreme example can be found in Cuba, where the rationing and ineffective central planning of communism made it difficult to purchase the desired quantities of even basic products such as cooking oil. Black markets are rampant because citizens want to buy things that are difficult to come by through legal channels. They're also common because it's so hard to find a job.
High unemployment can give rise to black markets. When workers can't find jobs in the above-ground economy, they may turn to jobs in the underground economy. These jobs could be as innocuous as fixing a neighbor's toilet (but being paid in cash and not reporting the income to the tax authorities) or as serious as selling cocaine (where not only the sale of the product itself but also the non-reporting of taxable income is illegal).
Personal Information
Not everything on the dark web is illegal, but it is a huge marketplace for stolen data and personal information. After a data breach or hacking incident, personal information is often bought and sold on the dark web by identity thieves looking to make money off your good name—and any numbers or information associated with you.
What Information Is Most Common and How Much Is It Worth?
But just how much is your information worth to criminals? The answer may surprise you. The fact is various pieces of information may be more valuable to criminals and it depends on a variety of factors.
Here are the 10 most common pieces of information sold on the dark web and the general range of what they're worth—or rather can sell for:
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How Is This Information Purchased by Identity Thieves on the Dark Web?
There are three main ways that personal information is commonly bought and sold on the dark web:
- Purchase data as a one-off, such as a Social Security number
- Purchase bulk data, batches of the same types of information
- Purchase bundled data, this is the "premium" package for identity thieves as it includes various types of information that are bundled together
So What Can You Do to Protect Yourself?
This may seem frightening or overwhelming, but it's important to be aware of what is going on so you can protect yourself. While data breaches are on the rise and outside of your control, you can practice good habits for your own personal information like maintaining healthy password practices, and not sharing your personal information unless it's necessary.
It's also a good idea to make sure that you keep your antivirus software and software updates on all devices (computer, laptop, tablet, phone) current as those updates may include security patches that are important to protecting your information.
You can also check out identity protection products for yourself and your family.
Products such as Experian IdentityWorks provide dark web monitoring, alerts and a view into your credit report and FICO® Score so you can keep an eye on things and get a heads up on potential red flags for identity theft. You can also run a free dark web scan on your Social Security number, phone number and email address.