Recruitment into prostitution takes many forms; victims can be recruited from schools, the streets, by friends, or by romantic partners. While traffickers often target those with vulnerabilities or individuals coming from abusive backgrounds, some traffickers are focused on something else entirely: credit history. By targeting individuals with “fresh” credit history, traffickers can use and exploit the identities of victims by creating bank accounts and acquiring credit cards in victims’ names.
During a Polaris focus group, one survivor described her trafficker’s goal of targeting strictly “girls that were 17 or just about to turn 18 just because their credit would be fresh.” The survivor explained that one of her trafficker’s first questions to recruits was “How is your credit?” In a 2018 Polaris survey, 26 percent of respondents reported that their trafficker controlled an account in their name, and almost all participants reported that their traffickers made sure their own names were nowhere in sight.
Because the mental and physical effects of trafficking tend to be the focus of discussion, the trafficker’s impact on a survivor’s financial past, present, and future often goes unnoticed. However, it remains a pressing concern, as traffickers continue to skip out on hotel bills, default on loans, or rack up credit card debt, then disappear without a trace. The victim, whose name is on the paper, is left to handle the financial turmoil alone.
The enormity of the industry and the extensive methods traffickers employ to profit from it exacerbate the problem. The International Labour Organization reports that forced commercial sexual exploitation accounts for 73 percent of the $236 billion global industry of forced labor. While some traffickers completely operate behind closed doors, a significant portion of the industry’s sum passes through financial institutions. The monetary interchange presents a suitable, albeit not easy, opportunity for financial sectors to detect and disrupt human trafficking operations.
Complex sex-trafficking schemes often involve transferring funds and laundering money. To move the ill-gained sums, some traffickers use the victims’ accounts and money transfer services, thereby avoiding identification themselves. Traffickers also sometimes accompany victims to financial institutions to structure deposits or conduct withdrawals in a manner calculated to circumvent investigation and evade detection.
Despite these well-calculated schemes, the finance industry has created robust systems designed to detect presumed illicit activities typically associated with human trafficking and money laundering. In many cases, these institutions are legally obligated to investigate. Federal laws like the Bank Secrecy Act (BSA) and the USA Patriot Act mandate that financial institutions monitor accounts and transactions and report suspected illegal activity. The Financial Crimes Enforcement Network seeks to advise financial institutions on how to detect signs or identify the “red flags” that may indicate illicit financial activity. This work has become an effective method in the identification of potential perpetrators and their subsequent prosecution; however, the majority of traffickers still slip through the cracks, leaving the victims to pay the price.
This price is really financial bondage; in many cases, even though a survivor may be physically free from trafficking, they are implicitly controlled by the damage done to their finances for years after the period of exploitation has ended. The amount and extent of the trafficker’s incurred debt imposed on the victim can become debilitating. In 2021, the Debt Bondage Repair Act was passed, creating a process through which survivors of commercial sexual exploitation can remove adverse credit information resulting from their trafficking experience from their credit report.
However, in reality, credit reporting agencies have yet to figure out how to provide the service with confidentiality, accuracy and in accordance with the legal timelines. The process of removing adverse credit information related to trafficking history involves document submissions to multiple individual agencies, which is a time-consuming and expensive process that still does not guarantee the documents will land in the right hands or arrive at all. Furthermore, these extremely sensitive documents that detail deeply personal survivor stories may float around different departments and be seen by those who do not have the authorization to handle them.
Additionally, the agencies are allowed to set their own requirements for proof of identification. In one instance, a survivor had to submit a copy of her driver’s license, passport, signed social security card, car insurance, and her W-2. Requiring this many forms of identification creates a barrier for survivors to financial liberty because many do not have the means to acquire this information. On top of all of this, there are legal timelines for the processing of a submission, that, unsurprisingly, tend not to concern credit reporting agencies.
The Debt Bondage Repair Act and the credit reporting agencies attempting, unsatisfactorily, to enforce it ignore the reality of many individuals’ present conditions and the burden the process imposes on a victim. While the process can work, as is, survivors face obstacles at every turn on the road toward greater financial independence. Credit reporting agencies should remove, rather than create, barriers obstructing survivors’ chances at liberation.
The CSE Institute will provide updates as they become available.
This piece is part of our first-year law student blog series. Congratulations to Julia Snyder on being chosen!
All views expressed herein are personal to the author and do not necessarily reflect the views of the Villanova University Charles Widger School of Law or of Villanova University.