Although illegal and not as prevalent other places, prostitution rings still operate with relative ease in Taiwan in the form of KTV bars, barber shops, hotels, massage parlors, and saunas.
KTV Bars
It's quite hard to tell which types of KTV bars are legit and which are used for prostitution.  I think this is done on purpose both to avoid law enforcement and for business reasons.  The general idea is that customers pay to sit and drink with women and then can negotiate further services to be done outside of the establishment.  This way the business is merely a platform and not a brothel subject to police raids.
Customers here can expect to pay extremely high prices for drinks and and have arbitrary fees tacked onto their bills.  Failure to pay will likely result in being locked in or dragged into a local alley by a local mafia crew.
Barber Shops
Much like the KTV bars the 'special' barber shops are sometimes hard to distinguish from regular ones.  But with a bit of luck and good spidey sense you should be able to tell them apart.  They usually exist in famous red light districts like Lin Sen North Road and WanHua.  Customers go into a private room with a barber chair and are joined by a lovely lady who is there to offer 'company' for an allotted amount of time.  What happens during that time and for how much is up to you and your lady friend to negotiate.  
Based on insider knowledge it seems as if they have some sort of agreement with the police to allow for raids during slow hours on weekdays.  That's when they usually staff the place with old ladies.  The quality of these places range from scary to amazing.  
Hotels
These types of hotels not easy to spot.  They look pretty much the same as the legitimate love hotels for couples.  But once you find one the receptionist will usually inform customers (especially if they're alone) on the types of services they offer at the establishment.
The process is pretty simple.  They send in a girl.  You decide 'yes' or 'next' and then do your thing.  Then exit through the gift shop and pray to God you didn't get herpes. 
Massage Parlors
The famous 'happy ending' is alive and well in Taiwan.  These places are usually staffed with illegal immigrants or runaway brides from Vietnam.  You can usually distinguish these types of spas from regular ones by noticing pictures of Vietnamese women or Vietnamese writing on the windows.  
Those looking for a bit 'extra' have to be sure they know the rules.  Typically the parlors offer a choice of a 1 or 2hr massage with or without oil.  Those who choose 2hr massage with oil will usually get a proposition for something extra at the end (or in the beginning depending on how lazy the masseuse is).  These places vary in how much 'extra' one can get though.  Some simply offer the rub and tug while others allow for more.
Saunas
These places are basically like a country club with a special section for rub and tugs.  Everything seems legit and the insides are covered in gorgeous marble.  There are showers, hot tubs, cold tubs, and lounging areas.  
But every once in a while a lady will approach you asking if you'd like to visit the other area for a hefty fee.  This is where it all goes down and then you pay on your way out.

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