Trapped by fraudulent debt—Canadian government failing survivors

After finally escaping the devastating trauma of numerous traffickers, Cassandra Harvey has been working to rebuild her life. But fraudulent benefit claims, payday loans and credit card debt racked up by the traffickers in her name are making that difficult. And while most of the financial institutions finally recognized her situation as “coerced debt” the Canada Revenue Agency (CRA) is failing to provide her any relief to help get her life back on track.  

The ongoing failure of the CRA 

When Harvey first got free from her traffickers, she took the first step on a difficult journey. In addition to healing from the trauma she endured, she also began trying to clear the debt her traffickers accrued in her name. Debt in the amount of $65,000. With help from agencies and financial institutions she has clawed back most of that debt. But the CRA still stands in her way. They continue to claim she owes them thousands of dollars for fraudulent tax benefits obtained in her name despite clear evidence of trafficking.  

Reclaim, a national program helping survivors clear coerced debts, attested in The Pointer: 

“Cassandra has made significant strides to reach stability in her life; despite the trauma and victimization she faced. The disruption that this coercive debt (to CRA) is causing serves as a constant reminder of her experience while having an impact on Cassandra’s continued success and journey of healing.” 

More than a year has passed since the CRA was made aware of Harvey’s situation, yet her debt remains. Claiming they are “deeply committed” to fairness for “these types of cases” the CRA refused to comment directly on her case. So far, Harvey estimates the CRA has taken at least $9,000 from tax assessments and other benefits. And Harvey is not alone. 

A cycle of debt with no way out 

Victim Services Toronto (VST) recently released a groundbreaking report. Their research analyzed the credit reports of 156 survivors. It found that collectively they held a horrific $2.2 million in trafficking-related debt. According to VST, the specific ways traffickers manipulate financial systems are not well documented. That means they remain hidden if not invisible. 

VST said in their report: 

“Survivors caught in this cycle often have no clear way out. When debts continue resurfacing…many survivors consider taking on additional debt or returning to sex work to try and resolve what feels like an inescapable financial trap.” 

According the VST, clearing debts with CRA is “particularly difficult.” Further, their research showed that even when the CRA was made aware debt was coerced, they did nothing about it. Harvey’s case and VST’s research underline a critical gap in the system for helping survivors of human trafficking. That survivors should not be pursued for coerced debts incurred by their traffickers. VST said “continuing to collect on such debts only compounds the harm.” 

Stop criminalizing victims of coercion

Coerced debt is starting to be recognized as another harm of human trafficking. That’s why Freedom United stands beside VST in calling on Canada’s tax administration to do the same and stop criminalizing survivors. A trauma-informed approach to coerced debt is requisite in all jurisdictions to help remove barriers to healing. As VST stated, by enhancing and adapting systems already in place, we can create meaningful change. Most important of all, we can reduce the long-term financial harm some survivors are currently experiencing and create a system that is “more responsive, more adaptive and ultimately more just.”