When trafficking victims are shackled by debt, can financial institutions help?

Survivors of human trafficking may also be victims of identity theft and coercive debt, says Ashley Franssen-Tingley, programs co-ordinator at the Canadian Centre to End Human Trafficking. Adapted Photo: Reziart/Shutterstock
Published April 4, 2019

A woman and a man enter a bank together and request to take out a loan in the woman’s name. She signs the required documents. When asked for her ID, the man she is with produces it.

The scene is common and seems innocuous. But, says Richard Dunwoody of AFO Ventures, who has 30 years’ experience in the credit and banking industries, it could be hiding something sinister.

The scenario above is one of many that Dunwoody says his eyes were opened to after learning about the surprising ways human trafficking and debt are interrelated.

Dunwoody is part of Project Recover, a public-private anti-human trafficking partnership of people in the banking and credit lending industries and advocates like the Canadian Centre to End Human Trafficking (CCEHT).

A Canadian problem

Human trafficking is a growing concern in Canada. According to Statistics Canada, 1,220 police-reported instances of human trafficking occurred in Canada between 2009 and 2016, and the number and rate of human trafficking incidents have increased steadily since 2010. (Due to its hidden nature, trafficking is difficult to measure, the agency notes, and the increase may be due in part to increased effort and resources into the investigation of such offences.) Ninety-five per cent of victims in police-reported cases were women, and most victims (72%) were under 25 years of age.

For some survivors of trafficking, the effects on their psyches and bodies are coupled with lasting debt.

Ashley Franssen-Tingley, who is programs co-ordinator at CCEHT and is working with Project Recover, identifies two different types of debt that can be incurred when someone is trafficked. The first is straightforward identity theft, in which the trafficker takes out loans or opens accounts in the victim’s name. The second is “coercive debt,” which she says is more difficult to identify. In such instances, the trafficking victim is the one who makes the transaction or takes out the loan, but does so under pressure from her trafficker.

“Fraudulent debt, when it’s able to be proven that the identity was taken…[is] probably easier…to identify and have resolved or investigated by law enforcement. What’s really tricky is the coercive piece,” says Franssen-Tingley.

Traffickers can also use drugs and alcohol to debt-bond their victims. In other cases, employees may be indentured. In the case of women working in massage parlours, for example, there may be exorbitant and unaffordable “exit fees” the woman must pay in order to quit. Similar tactics, Franssen-Tingley notes, have also been used to
exploit victims of forced labour and labour trafficking.

Sex trafficking and coercive debt

Often, Dunwoody says, a trafficker will take out a loan in the victim’s name, and then use proceeds from the victim’s sexual exploitation to pay the loan, effectively laundering money through them. “If… somebody put $10,000 or $20,000 a week into a bank account, cash, that would draw attention. But if [the trafficker] deposits a cheque from a loan company into a bank account, [it doesn’t look suspicious],” says Dunwoody. As far as the bank can tell, the victim has simply taken out a loan and is repaying it in a timely manner—meaning the trafficker can return to take out larger and larger loans.

Franssen-Tingley says that traffickers may take out coercive loans in their victims’ names not only from banks, but through payday lenders, online micro-lending, car loans or even cellphone plans. “Victims may be forced to turn over any of their social assistance cheques. Student loans have been used before by traffickers… Something that the police are seeing is that traffickers prefer to put any of these products into the victim’s name, because it allows him—or her—to stay one step removed from the trafficking activity.”

Often a trafficker will rent apartments or hotel rooms in which a victim is being exploited sexually under the victim’s name, so that the purchase can’t be traced to the trafficker.

The idea of Project Recover, Franssen-Tingley says, is to identify “a process that is streamlined so that victims can navigate all of these issues that are related to the debt that’s been incurred, fraudulently or through coercion.”

Project Recover’s aim is to find ways to help survivors with their personal finances in the aftermath of human trafficking, as well as develop efficient solutions to shut down and freeze credit products that have been exploited in this way.

Addressing the issues

When social service providers do an intake assessment with a survivor, Franssen- Tingley says, they look at a hierarchy of needs, prioritizing health and safety. However, issues like coercive debt might be overlooked. “What [the counsellors and the victim] can do is request their credit reports and review them early on, change mailing addresses, change PINs and passwords, close down any accounts that have been utilized.” Addressing the issue early can help stop any additional exploitation and the accumulation of more interest on those debts, she says.

Dunwoody also notes that when a survivor is freed or able to escape from a trafficking situation, they will likely not be in possession of their ID. “For them to get their credit report, they can’t prove who they are,” he says.

Bringing more light to this issue may also encourage banks and credit lenders to train their front-line workers to look for red flags.

Franssen-Tingley says she’s hoping Project Recover can develop “sensitivity” on the parts of banks and financial institutions. “It’s really hard to ‘prove’ coercive debt. You’ll look at that as, ‘Well, she signed it herself, she understood the terms.’…So proving that there was coercion is really challenging.”

It is hard on survivors to have to prove their trafficking situation, Franssen-Tingley says, and confronting their debt can be re-traumatizing.

“Sometimes it’s an exploitation that they didn’t even know was happening. After the fact, when they feel like maybe they’re in a better place and things are a little more stable, it’s almost another way that they’re victimized that can be quite shocking,” she says.

Third-party advocates

One potential idea is to have a list of reputable social service providers that could act as third-party advocates on behalf of victims, to assure financial institutions that trafficking took place.

“I think there’s some worry that perhaps some individuals who are not well- meaning will find out and maybe abuse any sort of policy that’s been put in place,” says Franssen-Tingley. The idea, she says, is to find a way to help advocate for those who have experienced coercive debt while assuring creditors that it will not lead to “an avalanche” of claims coming forward.

While there is currently no hard data on how prevalent the issue of coercive debt is, Franssen-Tingley says that the CCEHT is hoping to collect more data on human trafficking with the launch of a national hotline in 2019.

Franssen-Tingley says the response has been encouraging, though the project is
in its infancy. “Some of these big banks, this is like a .000 per cent of their bottom line. Forgiving a debt or working with a victim to reduce the debt load isn’t going to break the bank at the end of the day. But it really does come down to doing the right thing and helping young people get back on their feet so that they can be financially independent and have financial dignity and be contributing members of society again.”

The Anglican Church of Canada’s Council of General Synod voted in 2017 to endorse an anti-human trafficking resolution passed by the Anglican Consultative Council in 2012. Since that time, the national church has identified a plan to focus its advocacy on Missing and Murdered Indigenous Women and Girls, victims of sexual exploitation (many of whom, in Canada, are Indigenous) and Temporary Foreign Workers.

CCEHT is “thrilled that the Anglican church is shining a light” on human trafficking, especially by focusing on Indigenous communities, says Franssen-Tingley, noting that CCEHT has worked with the church on this issue in the past. “I always say, knowledge is the best way to inoculate our communities against this. You can know the red flags, and if something doesn’t feel right, we can catch it when it’s in the grooming and luring stage, before it moves into full exploitation.”

Franssen-Tingley says she is hopeful that good things will come out of Project Recover. “Any time we can increase education and awareness on this issue, that’s really good.”


  • Joelle Kidd

    Joelle Kidd was a staff writer for the Anglican Journal from 2017 to 2021.

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