‘Low risk, high reward’: How sex traffickers use coercive debt to exploit survivors

Coercive debt and financial abuse are a “systematic” part of how sex traffickers operate in Canada, with at least a quarter of all survivors dealing with fraudulent debt.

Julia Drydyk, executive director of the Canadian Centre to End Human Trafficking, says that research they did in 2020 on human trafficking corridors in Canada found that traffickers were “systematically putting the expenses associated with the trafficking in the victim’s name.”

While awareness of sex trafficking has grown, awareness of the financial abuse that goes on has not, which has advocates pushing for change.

“When it’s in someone else’s name, it’s harder to track from an anti-money laundering perspective,” Drydyk said.

“But we also know that the debts incurred are used as a tool to continue to coerce, threaten, and control those that they’re exploiting.”

Victim Services Toronto reports that at least one in four sex trafficking survivors have debt set up in their name by their trafficker, making starting over seem like a daunting task.

Having fraudulent debt set up in their name leaves a lasting financial impact as they try to rebuild their lives, said Kaitlin Bick, an anti-human trafficking specialist with Victim Services Toronto (VST).

Survivors have, on average, around $20,000 in fraudulent debt set up by their traffickers, data from VST shows. In some cases, that debt can rack up to as much as $100,000.

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The debt takes on different forms like credit cards, telecommunications, lines of credit, payday loans or even car loans.

The key to starting over is finding safe housing, Drydyk said, but the debts survivors face are a huge barrier to accessing that. Furthermore, trying to track the fraudulent debt can also often traumatize survivors.

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“It’s not fair to have to advocate for yourself, and have debt collectors calling you and saying you owe this money,” Bick said.

“That’s hard already, so to have to deal with that on top of all the trauma that you’re carrying around with you, it’s too much.“

Bick added that VST is trying to change this by making it easier for survivors to rebuild their lives.

The organization runs the Reclaim program, a Canada-wide initiative that involves advocating with creditors on behalf of human trafficking survivors to eliminate fraudulent debt.

“I feel like the more that we talk about that and the more we educate and have those conversations, the more that survivors are going to understand that there actually is a way out,” Bick said.

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By partnering with creditors and major financial institutions, the organization has been 90 per cent successful in getting survivors’ fraudulent debt removed from their credit reports.

In 2023, Ontario enacted legislation to protect survivors from fraudulent debt through Bill 41, the Protections from Coerced Debts Incurred in relation to Human Trafficking Act.

The bill makes it illegal for creditors to collect on coerced debt as a result of human trafficking, but a system still needs to be established to determine which cases meet the criteria.

In a statement, a spokesperson for the Ministry of Children, Community and Social Services says the government is in the process of developing those next steps.

“The statute allows for the development of regulations which would provide a mechanism to seek relief from debts that were incurred as a result of coercion or manipulation by traffickers, and when in force, can help to alleviate the financial burden that can hinder their recovery and reintegration into society,” the statement reads.

Saskatchewan introduced similar legislation at the end of 2023, the Protection from Human Trafficking (Coerced Debts) Amendment Act, to amend existing legislation and prohibit lenders from including information about coerced debts in credit reports, and from taking coerced debts into account when evaluating a potential loan.

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While these provinces work to determine how the legislation will work, Drydyk stressed the importance of ensuring survivors have access to the appropriate support to navigate the complex system, and that their well-being and recovery are at the center of any plans.

However, Drydyk says the problem is that this is only happening in some provinces, and some provinces still need a strategy to address coercive debt.

“Often we talk about trafficking as being a low-risk and high-reward crime, so being able to provide survivors with access to economic justice as well as social justice and legal justice as they exit these horrific, exploitative situations is at the very heart of addressing the root causes as well,” Drydyk said.

Survivors of sex trafficking looking for help tackling fraudulent debt can find more details on the Reclaim program’s page through Victim Services Toronto or by calling the agency’s Crisis Line at 416-808-7066. Help is also available Canada-wide through The Canadian Human Trafficking Hotline 24-7 at 1-833-900-1010.