The Hidden Economy of Fake IDs: Supply, Demand, and the Game of Staying One Step Ahead
Picture this: You are at a crowded bar, watching the bouncer check IDs. Ahead of you, someone nervously hands over what looks like the real thing — but it is a fake. For many college students, fake IDs are a ticket to the party scene. Beneath the surface, though, there is an entire underground economy driven by supply, demand, and constant innovation.
The appeal of fake IDs is simple — college students want access to bars, clubs, and alcohol before they are legally allowed. Social pressure and the fear of missing out make these IDs highly sought after. Restrictions only add to the temptation, pushing students to seek out these IDs despite the risks.
A study by the National Library of Medicine found that 40.1% of underage college students owned or had owned a fake ID (IDScan.net, 2023). In addition to previous statistics, a 2024 report found that nearly half (45%) of U.S. young adults aged 18-25 know someone who has successfully used a fake ID to access age-restricted products or venues (Scandit, 2024).
Meeting this demand are increasingly skilled counterfeiters. Today’s fake IDs are hard to spot, often indistinguishable from real ones with features like holograms, UV verification, and scannable barcodes. In 2019, U.S. Customs and Border Protection seized over 5,000 fake IDs shipped from China, which were equipped with advanced security features designed to bypass detection (Fox Business, 2019). This illustrates how sophisticated and globalized the fake ID market has become. As detection methods improve, so do the forgeries. It is a constant back and forth, with counterfeiters working to stay ahead of the bouncer’s sharp eye.
This rise in sophistication is a direct response to market demand. The fake ID market thrives because it strikes a temporary, unstable equilibrium: a state where supply meets demand momentarily but shifts rapidly as enforcement and counterfeit technology evolve and continually push the market to adapt (Baltzer, 2023). This market is a prime example of how economic principles shape underground economies. On the demand side, college students feel restricted by legal drinking ages, driving them to seek out fake IDs as a way to gain access to nightlife. In states such as New York, California, and Georgia, where underage drinking laws are strictly enforced, students are willing to pay as much as $100 for a high-quality fake ID that can pass scanning systems. The strong influence of FOMO (Fear of Missing Out) on social events and nightlife adds to this demand, making students less sensitive to price increases and contributing to fake ID inelasticity. This demonstrates how underground economies, like the one involving fake IDs, not only adapt to regulatory pressures but also capitalize on social motivations to satisfy demand. On the supply side, counterfeiters have recognized the growing demand and have stepped up with increasingly sophisticated products. The market finds an equilibrium where students are willing to pay a premium for quality, and producers respond by refining their techniques. The better the fake, the higher the price — reflecting the risks and the need for quality (Prieger & Kulick, 2018). Both sides adapt to this balance, with counterfeiters continually advancing their methods to avoid detection, while students pay more for the reassurance that their fake ID will work.
As governments introduce new security measures, counterfeiters adapt quickly. For example, when many states rolled out enhanced IDs with more robust security features like laser engraving (North Carolina Department of Transportation, 2024), producers, especially those operating out of overseas hubs like China, quickly incorporated similar features into their fake IDs as long as they have technology such as the CPL300 ID Card Laser Engraving System (Shenyang Piotec Technology Co., Ltd., n.d.). The rise of online black markets has made acquiring fake IDs easier than ever, and cryptocurrencies like Bitcoin add an extra layer of anonymity to transactions, making the entire operation more difficult for authorities to track.
While fake IDs may seem like a harmless way to sneak into bars, the risks are real. Students caught using them can face fines, criminal charges, and even expulsion. Beyond legal repercussions, students at institutions like Emory University may face academic sanctions, including probation, suspension, or expulsion, which can adversely affect their educational and professional futures. In Texas, for instance, possession of a fake ID is a Class C misdemeanor, punishable by up to 180 days in jail and a $2,000 fine (Doug Murphy Law Firm, 2024). Producers face even stricter penalties, with the possibility of felony charges and prison time (Theoharis, 2024). Yet, the profitability of this underground economy allows it to persist. Websites based in countries with relaxed enforcement can rake in tens of thousands of dollars monthly by selling IDs to students across the globe (Deffenbacher, 2016).
Thinking of this from a behavioral perspective, a college student deciding whether to use a fake ID to gain access to a bar faces a decision influenced by peer pressure, potential social rewards, and the risk of punishment. Gary Becker, an American nobel-winning economist, has a framework of rational choice that can be applied: the student evaluates the benefits (social acceptance and enjoyment) against the risks (being caught and legal consequences) (1994) .
A payoff matrix models this situation with two players: the student (Player 1) and the bouncer (Player 2). The student decides whether to present a fake ID or not, and the bouncer decides whether to accept or reject it.
The payoff values in the scenario of using a fake ID illustrate the dynamics of rational decision-making under peer pressure. Hypothetically, using reasonable gain/loss values, if the student successfully uses the ID, they gain social rewards (+3) while the bouncer avoids trouble and might receive a tip (+2). However, if the attempt fails, the student faces embarrassment and potential legal consequences (-2) while the bouncer gains professional satisfaction or avoids legal risks (+3). If the student does not attempt to use the ID, neither party gains or loses significantly (0, 1). Peer pressure significantly influences the student’s decision-making process. The presence of friends can inflate the perceived payoff of successfully using the ID as social acceptance becomes a highly valued reward, often outweighing the risks of embarrassment or legal trouble. This aligns with Becker’s observation that non-economic factors, such as social values and peer expectations are forward-looking behavior, playing a critical role in influencing rational behavior (Becker, 38). It should be noted that, with these payoffs, the Nash equilibrium (where neither player can improve their payoff by changing their strategy while the other’s strategy remains the same) occurs when the student does not use the fake ID. However, in real life, bouncers may be influenced to accept fake IDs to attract more business, or this game may be converted into a repeating game in which other students can learn what the odds of acceptance are by communicating with other students who have tried previously.
Future research could address these dynamics by employing several approaches. First, empirical studies using surveys or experiments with college students could measure the perceived costs and benefits of using fake IDs, including the impact of peer influence. Second, game-theoretic models could extend the prisoner’s dilemma framework to incorporate repeated interactions, exploring how frequent use of fake IDs alters the behaviors of both students and bouncers over time. Third, behavioral insights could analyze how peer pressure shifts rational calculations and evaluate how education or awareness campaigns might change perceived payoffs. By applying Becker’s framework and game theory to peer-driven college dynamics, future studies could provide valuable insights into risky behaviors and inform interventions designed to reduce harm while fostering safer social interactions.
The fake ID market thrives because it taps into basic economic forces: students want access to restricted spaces, and counterfeiters continue to deliver. One potential solution could be the implementation of stricter digital ID verification systems directly linked to government databases, making it much harder for fake IDs to pass scrutiny. Additionally, developing educational campaigns that address the risks of using fake IDs, combined with stepped-up penalties for suppliers, could help reduce demand. Tackling this issue requires disrupting both supply and demand, and a stronger emphasis on digital verification could significantly hinder counterfeiters’ ability to keep pace.
Edited by Jeffrey Wu
References
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Shenyang Piotec Technology Co., Ltd. (n.d.). CPL300 ID card laser engraving machine. https://www.piotecglobal.com/products/cpl300-id-card-laser-engraving-machine/
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