Existing law authorizes a person who has been the victim of human trafficking to bring a civil action for damages, as specified, and also to be awarded attorneys fees and costs. Existing law authorizes a plaintiff to be awarded up to 3 times the plaintiffs actual damages or $10,000, whichever is greater.

This bill would authorize the plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as a result of trafficking and without the consent of the plaintiff. The bill would authorize the court to base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim. The bill would provide that the finding would not affect the priority of any lien or other security interest.

Existing law, the California Fair Employment and Housing Act, establishes the Civil Rights Department under the direction of an executive officer known as the Director of Civil Rights to enforce civil rights laws, including laws relating to human trafficking.

Existing law authorizes the director to bring a civil action in the name of the department, acting in the public interest, on behalf of an aggrieved person if conference, conciliation, mediation, or persuasion fails to eliminate an unlawful practice. Existing law requires the department to issue the person claiming to be aggrieved a right-to-sue notice if a civil action is not brought by the department, as specified. Existing law authorizes a court to grant relief, including awarding attorneys fees and costs and granting any relief a court is empowered to grant in a civil action, such as requiring an employer to conduct training for all employees, supervisors, and management, and assessing a civil penalty.

This bill would provide that the court may grant any relief available under any of the civil rights laws enforced by the department.

This bill would also make nonsubstantive changes to these provisions.

Existing law authorizes a person who has been the victim of human trafficking to bring a civil action for damages, as specified, and also to be awarded attorneys fees and costs. Existing law authorizes a plaintiff to be awarded up to 3 times the plaintiffs actual damages or $10,000, whichever is greater.

This bill would authorize the plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as a result of trafficking and without the consent of the plaintiff. The bill would authorize the court to base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim. The bill would provide that the finding would not affect the priority of any lien or other security interest.

Existing law, the California Fair Employment and Housing Act, establishes the Civil Rights Department under the direction of an executive officer known as the Director of Civil Rights to enforce civil rights laws, including laws relating to human trafficking.

Existing law authorizes the director to bring a civil action in the name of the department, acting in the public interest, on behalf of an aggrieved person if conference, conciliation, mediation, or persuasion fails to eliminate an unlawful practice. Existing law requires the department to issue the person claiming to be aggrieved a right-to-sue notice if a civil action is not brought by the department, as specified. Existing law authorizes a court to grant relief, including awarding attorneys fees and costs and granting any relief a court is empowered to grant in a civil action, such as requiring an employer to conduct training for all employees, supervisors, and management, and assessing a civil penalty.

This bill would provide that the court may grant any relief available under any of the civil rights laws enforced by the department.

This bill would also make nonsubstantive changes to these provisions.

Existing law authorizes a person who has been the victim of human trafficking to bring a civil action for damages, as specified, and also to be awarded attorneys fees and costs. Existing law authorizes a plaintiff to be awarded up to 3 times the plaintiffs actual damages or $10,000, whichever is greater.

This bill would authorize the plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as a result of trafficking and without the consent of the plaintiff. The bill would provide that acts that would support this finding include, but are not limited to, coerced debt resulting from abuse or unlawful use of personally identifiable information, as specified. authorize the court to base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim. The bill would provide that the finding would not affect the priority of any lien or other security interest.

Existing law, the California Fair Employment and Housing Act, establishes the Civil Rights Department under the direction of an executive officer known as the Director of Civil Rights to enforce civil rights laws, including laws relating to human trafficking.

Existing law authorizes the director to bring a civil action in the name of the department, acting in the public interest, on behalf of an aggrieved person if conference, conciliation, mediation, or persuasion fails to eliminate an unlawful practice. Existing law requires the department to issue the person claiming to be aggrieved a right-to-sue notice if a civil action is not brought by the department, as specified. Existing law authorizes a court to grant relief, including awarding attorneys fees and costs and granting any relief a court is empowered to grant in a civil action, such as requiring an employer to conduct training for all employees, supervisors, and management, and assessing a civil penalty.

This bill would provide that the court may grant any relief available under any of the civil rights laws enforced by the department.

This bill would also make nonsubstantive changes to these provisions.

Existing law authorizes a person who has been the victim of human trafficking to bring a civil action for damages, as specified, and also to be awarded attorneys fees and costs. Existing law authorizes a plaintiff to be awarded up to 3 times the plaintiffs actual damages or $10,000, whichever is greater.

This bill would authorize the plaintiff to seek from the judge court a finding that specific debts attributed to the plaintiff were incurred as a result of trafficking and without the consent of the plaintiff. The bill would provide that acts that would support this finding include, but are not limited to, coerced debt resulting from abuse or unlawful use of personally identifiable information, as specified. The bill would provide that the finding would not affect the priority of any lien or other security interest. The

This bill would also make nonsubstantive changes to these provisions.

Existing law authorizes a person who has been the victim of human trafficking to bring a civil action for damages, as specified, and also to be awarded attorneys fees and costs. Existing law authorizes a plaintiff to be awarded up to 3 times the plaintiffs actual damages or $10,000, whichever is greater.

This bill would authorize the plaintiff to seek from the judge a finding that specific debts were incurred as a result of trafficking and without the consent of the plaintiff. The bill would provide that acts that would support this finding include, but are not limited to, unlawful use of personally identifiable information, as specified. The bill would provide that the finding would not affect the priority of any lien or other security interest. The bill would also make nonsubstantive changes to these provisions.

 UNFINISHED BUSINESS  

Bill No: SB 727

Author: Limón (D), et al.

Amended: 9/7/23

Vote: 21

SENATE JUDICIARY COMMITTEE: 11-0, 5/2/23

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Min, Niello, Stern, Wiener

SENATE FLOOR: 38-0, 5/15/23

AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Seyarto, Skinner, Stern, Umberg, Wahab, Wiener, Wilk

NO VOTE RECORDED: Rubio, Smallwood-Cuevas

ASSEMBLY FLOOR: 80-0, 9/12/23 - See last page for vote

SUBJECT: Human trafficking: civil actions

SOURCE: Coalition to Abolish Slavery and Trafficking

Western Center on Law and Poverty

DIGEST:

This bill authorizes a plaintiff in an action arising from human trafficking to seek a finding that specific debts were incurred as the result of the trafficking and without the consent of the plaintiff.

Assembly Amendments

narrow the debts covered by the bill, provide greater guidance to the courts, and expand the remedies that can be sought by the Civil Rights Department.

ANALYSIS:

Existing law:

1. Authorizes a victim of human trafficking, as defined, to bring a civil action for specified damages and relief. (Civ. Code § 52.5.)
2. Establishes the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts. (Civ. Code § 1788 et seq.)
3. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
4. Establishes the Consumer Credit Reporting Agencies Act, which prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Civ. Code § 1785.1 et seq.)
5. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period; the order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Fam. Code § 6342.5.)
6. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
7. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Civ. Code § 1798.93.)
8. Requires a claimant to cease collection activities, as provided, and undertake a review of the relevant debt, if a debtor provides a sworn certification that the particular debt is a “coerced debt” and submits “adequate documentation.” (Civ. Code § 1798.97.2.)
9. Defines “coerced debt” as a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence. (Civ. Code § 1798.97.1.)
10. Authorizes an alleged debtor to bring an action against an alleged creditor to establish that the alleged creditor’s claim arises from a coerced debt. Authorizes a claimant to move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred. (Civ. Code § 1798.97.3.)
11. Provides that if the debtor establishes by a preponderance of the evidence that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment. (Civ. Code § 1798.97.3.)
12. Prohibits a person from causing another person to incur a coerced debt, and a person in violation shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimant’s attorney’s fees and costs. (Civ. Code § 1798.97.2.)
13. Allows a creditor to collect against others and use all rights and remedies against a person who caused a coerced debt or against a person who benefited from a coerced debt, as provided. Exempts from the above provisions secured debts. (Civ. Code § 1798.97.3.)

This bill:

1. Authorizes a plaintiff in an action for damages resulting from human trafficking, to seek from the court a finding that specific debts attributed to the plaintiff were incurred as the result of trafficking and without the consent of the plaintiff.
2. Provides that the court may base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim.
3. Clarifies that a finding shall not affect the priority of any lien or other security interest.
4. Provides that a debt attributed to the plaintiff is incurred as the result of trafficking when the plaintiff is a victim of any illegal act associated with human trafficking and the debt or a portion of the debt meets all of the following criteria:
   1. It was incurred for personal, family, or household use.
   2. It is in the name of the plaintiff.
   3. It was incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence.
5. Clarifies that the Civil Rights Department (CRD) may seek relief described above in a civil action brought by CRD on behalf of a trafficking survivor.

Background

Current state law lays out the elements of the crime of human trafficking. Generally requiring a finding that a person deprived or violated the personal liberty of another with specified intent.

Oftentimes, a victim of human trafficking is subjected to economic abuse by the trafficker, incurring and leaving behind a sea of debts in the victim’s name. In order to assist victims to overcome the effects of this abuse, this bill authorizes plaintiffs in the civil actions described above to seek from the court a finding that specific debts attributed to the victim were incurred without their consent and as a result of human trafficking. The bill identifies required criteria for qualifying for this finding. The bill clarifies that such a finding does not affect the priority of any lien or other security interest. This bill is co-sponsored by Western Center on Law and Poverty. There is no known opposition.

Comments

Human trafficking is the world’s fastest growing criminal enterprise, bringing in annual profits in the tens of billions of dollars. Human trafficking is generally defined as the use of force, coercion, or fraud to obtain coerced labor or personal services. Existing law provides that any person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services is guilty of the crime of human trafficking.

The International Labour Organization estimates that approximately 40 million people were victims of some form of human slavery worldwide in 2016.^[1] This includes 24.9 million in forced labor, meaning they were being “forced to work under threat or coercion as domestic workers, on construction sites, in clandestine factories, on farms and fishing boats, in other sectors, and in the sex industry.” Over 70 percent of these victims were women and girls, and one in four victims were children. In their 2019 Data Report, the U.S. National Human Trafficking Hotline (NHTH) identified over 22,000 victims and survivors and over 4,300 traffickers.^[2]

The U.S. State Department has estimated that the incidence of human trafficking and slavery has only gotten worse during the COVID-19 pandemic:

The economic and social distress generated by the pandemic and related mitigation efforts exacerbated risks for vulnerable and marginalized populations. These included women and children, people affected by travel restrictions and stay-at-home orders, communities in areas of food insecurity, and survivors of trafficking, as well as persons directly and indirectly affected by the disruption of economic activities and reduced livelihood options. Due to school closures, some children lacked access to education, shelter, and/or food. Survivors of trafficking faced an increased risk of potential re-victimization due to financial and emotional hardships during the crisis. ^[3]

Traffickers look for people who are susceptible for a variety of reasons, including psychological or emotional vulnerability, lack of a social safety net, natural disasters, political instability, or economic hardship.

Relevant here, the financial distress of these victims only gets worse. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives.^[4]

The CFPB details the potential consequences:

• Unemployment, costly insurance, and limited housing options. [Credit reporting agencies (CRA)] collect consumers’ credit information, including payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of credit relationships. Consumer reports can inform a company’s decision about whether to make a job offer, an insurance company’s decision on whether to provide insurance and at what cost, a bank’s mortgage or a landlord’s rental decision, and even a utility company’s decision on whether to require a deposit before turning on the lights. Negative information on credit reports, regardless of validity or accuracy, can severely limit survivors’ abilities to rebuild their lives.
• Bills, charges, and expensive credit lines. Survivors are often left with the bills and charges racked up by traffickers in survivors’ names and on their accounts. In addition to having to manage the actual bills and charges, if outstanding bills and charges are reported to CRAs, survivors can face prohibitively high costs to access the credit essential to restoring their financial stability.

Signed into law in December 2021, the Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain negative information about a survivor of trafficking from any period the survivor was being trafficked. The CFPB issued rules to prevent CRAs from including negative information resulting from abuse; CFPB Director Rohit Chopra explained: “As survivors of human trafficking go through the recovery process, they shouldn't be penalized for abuse they have endured. The CFPB's proposal will help ensure that survivors can work to rebuild their lives, including accessing credit, opening a bank account, and finding a job.”^[5]

This bill seeks to similarly assist survivors of human trafficking as they look to deal with the financial fallout of being trafficked.

Rebuilding survivors’ lives

Section 236.1 of the Penal Code lays out the elements of the crime of human trafficking. The law provides that a person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services or to carry out a violation of specified crimes against children, is guilty of human trafficking.

In order to provide victims of such trafficking the ability to make themselves whole, Section 52.5 of the Civil Code provides them a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief. Section 52.5 further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages.

This bill provides another level of protection for these victims by authorizing them to seek a finding that specific debts attributed to the victim were incurred as the result of trafficking and were incurred without the victim’s consent.

According to the author:

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

This follows related legislation that has focused on victims of financial abuse. Similar language to this bill is found in AB 2517 (Gloria, Chapter 245, Statutes of 2020). AB 2517 authorized courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the victim. In addition, AB 1243 (Blanca Rubio, Chapter 273, Statutes of 2021) provided that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse.

Last year, SB 975 (Min, Chapter 989, Statutes of 2022) created a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. SB 975 authorized a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such “coerced debts” and a cause of action against the perpetrator in favor of the claimant.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 9/12/23)

Coalition to Abolish Slavery and Trafficking (co-source)

Western Center on Law and Poverty (co-source)

OPPOSITION: (Verified 9/12/23)

None received

ARGUMENTS IN SUPPORT: The Western Center on Law and Poverty writes:

“SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced. That finding can then be used to dispute a debt with a credit reporting agency, and can be used as evidence to provide to a creditor or debt collector that they did not consent to the debt and therefore should not be liable. This bill will also educate judges of the availability of that relief, and encourage advocates and survivors to call out the financial consequences of trafficking, so that any impact may be addressed as part of the survivor’s overall economic recovery.”

ASSEMBLY FLOOR: 80-0, 9/12/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

9/12/23 19:39:40

**** END ****

1. Global Estimates of Modern Slavery (2017) International Labour Organization, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_575479.pdf. All internet citations are current as of September 12, 2023. ↑

2. 2019 Data Report, U.S. National Human Trafficking Hotline, https://humantraffickinghotline.org/sites/default/files/Polaris-2019-US-National-Human-Trafficking-Hotline-Data-Report.pdf. ↑

3. Trafficking in Persons Report (June 2021) United States Department of State, https://www.state.gov/wp-content/uploads/2021/09/TIPR-GPA-upload-07222021.pdf. ↑

4. CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/. ↑

5. Ibid. ↑

SENATE THIRD READING

STR Bill Id:SB 727

Author:(Limón)

As Amended Ver:September 7, 2023

Majority vote

SUMMARY

Allows a survivor of human trafficking to obtain a court finding that specific debts attributed to the survivor were incurred as the result of trafficking and without their consent.

Major Provisions

1. Allows a plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as the result of trafficking and without the consent of the plaintiff.
2. Clarifies that, for purposes of 1), above, the court may base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim. The finding shall not affect the priority of any lien or other security interest.
3. Clarifies that "a debt attributed to the plaintiff" that is "incurred as the result of trafficking" and subject to discharge under the bill is a debt that meets all of the following criteria:
   1. It was incurred for personal, family, or household use.
   2. It is in the name of the plaintiff.
   3. It was incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence.
4. Clarifies that the Civil Rights Department (CRD) may seek relief described above in a civil action brought by CRD on behalf of a trafficking survivor.

COMMENTS

In order to provide survivors of human trafficking the ability to make themselves financially whole, existing law provides such survivors the right to bring a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief against their traffickers. (Civil Code Section 52.5.) It further authorizes a plaintiff to be awarded up to three times the plaintiff's actual damages or $10,000, whichever is greater. (Ibid.) A prevailing plaintiff may also be awarded attorney's fees, costs, and punitive damages. (Ibid.)

This bill, co-sponsored by the Coalition to Abolish Slavery and Trafficking (CAST); Los Angeles Center for Law and Justice; and Western Center on Law and Poverty, provides survivors of human trafficking another level of protection by authorizing them to seek a court finding that specific debts attributed to them were incurred as a result of trafficking and without their consent and discharging such debts.

Human Trafficking. Human trafficking is a modern form of slavery that involves depriving or violating the personal liberty of another person with the intent to obtain forced labor or sex. Though recognized as a global problem, identifying trafficking is complex, making it difficult to estimate the full scale of the problem. For example, survivors themselves may not recognize they are being trafficked, and law enforcement may lack the training to correctly identify that an individual is being trafficked.

Data suggests that trafficking is a significant problem in California, especially within San Francisco, Santa Clara, Sacramento, Ventura, Los Angeles, Fresno, Alameda, and San Diego counties. (National Human Trafficking Hotline, National Human Trafficking Hotline Data Report (2020), accessible at https://humantraffickinghotline.org/en/resources/2020-national-hotline-annual-report.) In 2020, the National Human Trafficking Hotline received more trafficking cases from California than any other state. (Ibid.)

Most relevant to this bill, the financial distress of trafficking survivors is significant. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims' credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives. (CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/.)

Legislative efforts to help trafficking survivors recover their financial footing. Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty.

Recent legislation has focused on this issue, helping survivors of various forms of abuse who also suffer financial abuse. For example, AB 2517 (Gloria), Chapter 245, Statutes of 2020, authorizes courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the survivor. AB 1243 (Blanca Rubio), Chapter 273, Statutes of 2021, provides that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse. Just last year, SB 975 (Min), Chapter 989, Statutes of 2022, creates a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor's resources or personal information for personal gain. SB 975 authorizes a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such "coerced debts" and a cause of action against the perpetrator in favor of the claimant.

This bill seeks to provide similar remedies to survivors of human trafficking who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting such debt. However, a finding made pursuant to the bill would not affect the priority of any lien or other security interest that was established prior to the date of the finding.

According to the Author

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

Arguments in Support

Co-sponsor CAST writes the following about why this bill is needed:

Much like domestic violence awareness, one of the impacts of human trafficking that is often overlooked by the general public is the financial consequences to the survivor. For instance, the Allstate Foundation found that more than half of those surveyed were unaware of the impact of finance on survivors of domestic violence. And almost half of respondents agreed that financial abuse is the hardest form of abuse for outsiders to recognize.

Traffickers use financial abuse as a form of control over the survivor. Traffickers use tactics like debt bondage, where the survivor must work to pay back an alleged debt owed to a trafficker. Traffickers also frequently use coerced debt, or debt that the trafficker takes out in the survivor's name, sometimes with the survivor's knowledge, but without their consent, as a form of control. Traffickers will then remind the survivor that they will never be able to leave the trafficking situation because of their financial obligations.

SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced.

Arguments in Opposition

No opposition on file.

FISCAL COMMENTS

None

VOTES

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Seyarto, Skinner, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Rubio, Smallwood-Cuevas

ASM JUDICIARY: 11-0-0

YES: Maienschein, Essayli, Connolly, Dixon, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas, Sanchez

UPDATED

VERSION: September 7, 2023

CONSULTANT: Alison Merrilees / JUD. / (916) 319-2334 FN: 0001902

SENATE THIRD READING

STR Bill Id:SB 727

Author:(Limón)

As Amended Ver:June 14, 2023

Majority vote

SUMMARY

Allows a survivor of human trafficking to obtain a court finding that specific debts attributed to the survivor were incurred as the result of trafficking and without their consent.

Major Provisions

1. Allows a plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as the result of trafficking and without the consent of the plaintiff.
2. Clarifies that, for purposes of 1), above, the court may base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim, including but not limited to a violation of Civil Code Section 1798.97.2, or a violation of Penal Code Section 530.5. The finding shall not affect the priority of any lien or other security interest.
3. Clarifies that the Civil Rights Department (CRD) may seek relief described above in a civil action brought by CRD on behalf of a trafficking survivor.

COMMENTS

In order to provide survivors of human trafficking the ability to make themselves financially whole, existing law provides such survivors the right to bring a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief against their traffickers. (Civil Code Section 52.5.) It further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. (Ibid.) A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages. (Ibid.)

This bill, co-sponsored by the Coalition to Abolish Slavery and Trafficking (CAST); Los Angeles Center for Law and Justice; and Western Center on Law and Poverty, provides survivors of human trafficking another level of protection by authorizing them to seek a court finding that specific debts attributed to them were incurred as a result of trafficking and without their consent.

Human Trafficking. Human trafficking is a modern form of slavery that involves depriving or violating the personal liberty of another person with the intent to obtain forced labor or sex. Though recognized as a global problem, identifying trafficking is complex, making it difficult to estimate the full scale of the problem. For example, survivors themselves may not recognize they are being trafficked, and law enforcement may lack the training to correctly identify that an individual is being trafficked.

Data suggests that trafficking is a significant problem in California, especially within San Francisco, Santa Clara, Sacramento, Ventura, Los Angeles, Fresno, Alameda, and San Diego counties. (National Human Trafficking Hotline, National Human Trafficking Hotline Data Report (2020), accessible at https://humantraffickinghotline.org/en/resources/2020-national-hotline-annual-report.) In 2020, the National Human Trafficking Hotline received more trafficking cases from California than any other state. (Ibid.)

Most relevant to this bill, the financial distress of trafficking survivors is significant. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives. (CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/.)

Legislative efforts to help trafficking survivors recover their financial footing. Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty.

Recent legislation has focused on this issue, helping survivors of various forms of abuse who also suffer financial abuse. For example, AB 2517 (Gloria), Chapter 245, Statutes of 2020, authorizes courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the survivor. AB 1243 (Blanca Rubio), Chapter 273, Statutes of 2021, provides that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse. Just last year, SB 975 (Min), Chapter 989, Statutes of 2022, creates a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. SB 975 authorizes a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such "coerced debts" and a cause of action against the perpetrator in favor of the claimant.

This bill seeks to provide similar remedies to survivors of human trafficking who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting such debt. However, a finding made pursuant to the bill would not affect the priority of any lien or other security interest that was established prior to the date of the finding.

According to the Author

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

Arguments in Support

Co-sponsor CAST writes the following about why this bill is needed:

Much like domestic violence awareness, one of the impacts of human trafficking that is often overlooked by the general public is the financial consequences to the survivor. For instance, the Allstate Foundation found that more than half of those surveyed were unaware of the impact of finance on survivors of domestic violence. And almost half of respondents agreed that financial abuse is the hardest form of abuse for outsiders to recognize.

Traffickers use financial abuse as a form of control over the survivor. Traffickers use tactics like debt bondage, where the survivor must work to pay back an alleged debt owed to a trafficker. Traffickers also frequently use coerced debt, or debt that the trafficker takes out in the survivor’s name, sometimes with the survivor's knowledge, but without their consent, as a form of control. Traffickers will then remind the survivor that they will never be able to leave the trafficking situation because of their financial obligations.

SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced.

Arguments in Opposition

No opposition on file.

FISCAL COMMENTS

None

VOTES

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Seyarto, Skinner, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Rubio, Smallwood-Cuevas

ASM JUDICIARY: 11-0-0

YES: Maienschein, Essayli, Connolly, Dixon, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas, Sanchez

UPDATED

VERSION: June 14, 2023

CONSULTANT: Alison Merrilees / JUD. / (916) 319-2334 FN: 0001082

Date of Hearing: June 13, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

SBPCA Bill Id:SB 727

Author:(Limón) – As Introduced Ver:February 17, 2023

PROPOSED CONSENT (As Proposed to be Amended)

SENATE VOTE: 38-0

SUBJECT: HUMAN TRAFFICKING: CIVIL ACTIONS

KEY ISSUE: SHOULD A SURVIVOR OF HUMAN TRAFFICKING HAVE THE ABILITY TO OBTAIN A COURT FINDING THAT SPECIFIC DEBTS ATTRIBUTED TO THEM WERE INCURRED AS THE RESULT OF TRAFFICKING AND WITHOUT THEIR CONSENT?

SYNOPSIS

Human trafficking is a modern form of slavery that involves depriving or violating the personal liberty of another person with the intent to obtain forced labor or sex. Though recognized as a global problem, identifying trafficking is complex, making it difficult to estimate the full scale of the problem. Most relevant to this bill, the financial distress of trafficking survivors is significant. Survivors are often left with the bills and charges racked up by traffickers in survivors’ names and on their accounts.

Recent legislation has focused on this issue, helping victims of various forms of abuse who also suffer financial abuse. Just last year, SB 975 (Min, Ch. 989, Stats. 2022) created a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. In order to provide survivors of human trafficking the ability to make themselves financially whole, existing law provides such survivors the right to bring a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief against their traffickers. (Civil Code Section 52.5.) It further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. (Ibid.) A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages. (Ibid.)

This bill, co-sponsored by the Coalition to Abolish Slavery and Trafficking (CAST); Los Angeles Center for Law and Justice; and Western Center on Law & Poverty, and supported by other legal and anti-poverty advocacy organizations, provides survivors of human trafficking another level of protection by authorizing them to seek a court finding that specific debts attributed to them were incurred as a result of trafficking and without their consent. The author proposes several clarifying amendments to ensure that survivors are able to establish that their debts were incurred by illegal activity and without their consent. The proposed amendments, which also clarify that the Civil Rights Department may obtain the benefit of the bill when it brings a civil action in the name of the department in the public interest, on behalf of the person claiming to be aggrieved, are incorporated into the SUMMARY, below, and explained in the analysis. There is no opposition to the bill on file.

SUMMARY: Allows a survivor of human trafficking to obtain a court finding that specific debts attributed to them were incurred as the result of trafficking and without their consent. Specifically, this bill:

1. Allows a plaintiff to seek from the court a finding that specific debts attributed to the plaintiff were incurred as the result of trafficking and without the consent of the plaintiff.
2. Clarifies that, for purposes of 1), the court may base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim, including but not limited to a violation of Section 1798.97.2, or a violation of Section 530.5 of the Penal Code. The finding shall not affect the priority of any lien or other security interest.
3. Clarifies that the Civil Rights Department (CRD) may seek relief described above in a civil action brought by CRD on behalf of a trafficking survivor.

EXISTING LAW:

1. Authorizes a victim of human trafficking, as defined, to bring a civil action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief. A prevailing plaintiff may also be awarded attorney’s fees and costs. The plaintiff may also be awarded up to three times their actual damages or $10,000, whichever is greater. In addition, punitive damages may be awarded upon proof of the defendant’s malice, oppression, fraud, or duress in committing the act of human trafficking. (Civil Code Section 52.5. All further statutory referrences are to this code, unless otherwise indicated.)
2. Requires that the above action be commenced within seven years of the date on which the trafficking survivor was freed from the trafficking situation or, if the survivor was a minor when the act of human trafficking against the survivor occurred, within 10 years after the date the plaintiff attains the age of majority, except as specified. (Section 52.5.)
3. Establishes the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts. (Section 1788 et seq.)
4. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Section 1788.18.)
5. Establishes the Consumer Credit Reporting Agencies Act. The Act prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Section 1785.1 et seq.)
6. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Section 1798.93.)
7. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period. The order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Family Code Section 6342.5.)
8. Requires a claimant to cease collection activities, as provided, and undertake a review of the relevant debt, if a debtor provides a sworn certification that the particular debt is a “coerced debt” and submits “adequate documentation.” (Section 1798.97.2.)
9. Defines “coerced debt” as a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence. (Section 1798.97.1.)
10. Defines “adequate documentation” as documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and is one of a specified set of documentation. (Section 1798.97.1.)
11. Authorizes an alleged debtor to bring an action against an alleged creditor to establish that the alleged creditor’s claim arises from a coerced debt. In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is a coerced debt. (Section 1798.97.3.)
12. Requires an alleged debtor to plead the allegations of coerced debt with particularity and to attach adequate documentation and a sworn written certification to the complaint or cross-complaint, as provided. (Section 1798.97.3.)
13. Authorizes a claimant to move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred. (Section 1798.97.3.)
14. Provides that if the debtor establishes by a preponderance of the evidence that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment. (Section 1798.97.3.)
15. Prohibits a person from causing another person to incur a coerced debt. A person in violation shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimant’s attorney’s fees and costs. (Section 1798.97.2.)
16. Allows a creditor to collect against others and use all rights and remedies against a person who caused a coerced debt or against a person who benefited from a coerced debt, as provided. (Section 1798.97.3.)
17. Exempts from the above provisions secured debts. (Section 1798.97.3.)
18. Estalishes as crimes a number of financial crimes involving the illegal possession and use of personal identifying information of another person, including the following:
19. Willfully obtaining personal identifying information of another person, and using that information for any unlawful purpose. (Penal Code Section 530.5 (a).)
20. Willfully obtaining personal identifying information of another person, using that information to commit a crime in addition to a violation of (a), and being convicted of that crime. (Id. at (b).)
21. With the intent to defraud, acquiring or retaining possession of the personal identifying information of another person. (Id. at (c)(1).)
22. With the intent to defraud, selling, transfering, or conveying the personal identifying information of another person. (Id. at (d)(1).)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: In order to provide survivors of human trafficking the ability to make themselves financially whole, existing law provides such survivors the right to bring a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief against their traffickers. (Section 52.5.) It further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. (Ibid.) A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages. (Ibid.)

This bill, co-sponsored by the Coalition to Abolish Slavery and Trafficking (CAST); Los Angeles Center for Law and Justice; and Western Center on Law & Poverty, provides survivors of human trafficking another level of protection by authorizing them to seek a court finding that specific debts attributed to them were incurred as a result of trafficking and without their consent. According to the author:

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

Human Trafficking. Human trafficking is a modern form of slavery that involves depriving or violating the personal liberty of another person with the intent to obtain forced labor or sex. Though recognized as a global problem, identifying trafficking is complex, making it difficult to estimate the full scale of the problem. For example, survivors themselves may not recognize they are being trafficked, and law enforcement may lack the training to correctly identify that an individual is being trafficked.

Data suggests that trafficking is a significant problem in California, especially within San Francisco, Santa Clara, Sacramento, Ventura, Los Angeles, Fresno, Alameda, and San Diego counties. (National Human Trafficking Hotline, National Human Trafficking Hotline Data Report (2020), accessible at https://humantraffickinghotline.org/en/resources/2020-national-hotline-annual-report.) In 2020, the National Human Trafficking Hotline received more trafficking cases from California than any other state. (Ibid.)

Most relevant to this bill, the financial distress of trafficking survivors is significant. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives. (CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/.)

The CFPB details the potential consequences:

• Unemployment, costly insurance, and limited housing options. [Credit reporting agencies (CRA)] collect consumers’ credit information, including payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of credit relationships. Consumer reports can inform a company’s decision about whether to make a job offer, an insurance company’s decision on whether to provide insurance and at what cost, a bank’s mortgage or a landlord’s rental decision, and even a utility company’s decision on whether to require a deposit before turning on the lights. Negative information on credit reports, regardless of validity or accuracy, can severely limit survivors’ abilities to rebuild their lives.
• Bills, charges, and expensive credit lines. Survivors are often left with the bills and charges racked up by traffickers in survivors’ names and on their accounts. In addition to having to manage the actual bills and charges, if outstanding bills and charges are reported to CRAs, survivors can face prohibitively high costs to access the credit essential to restoring their financial stability.

Signed into law in December 2021, the Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain negative information about a survivor of trafficking from any period the survivor was being trafficked. The CFPB issued rules to prevent CRAs from including negative information resulting from abuse; CFPB Director Rohit Chopra explained: “As survivors of human trafficking go through the recovery process, they shouldn't be penalized for abuse they have endured. The CFPB's proposal will help ensure that survivors can work to rebuild their lives, including accessing credit, opening a bank account, and finding a job.” (CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking, supra.)

Legislative efforts to help trafficking survivors recover their financial footing. Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty.

Recent legislation has focused on this issue, helping survivors of various forms of abuse who also suffer financial abuse. For example, AB 2517 (Gloria, Ch. 245, Stats. 2020) authorizes courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the survivor. AB 1243 (B. Rubio, Ch. 273, Stats. 2021) provides that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse. Just last year, SB 975 (Min, Ch. 989, Stats. 2022) created a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. SB 975 authorizes a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such “coerced debts” and a cause of action against the perpetrator in favor of the claimant.

This bill seeks to provide similar remedies to survivors of human trafficking who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting such debt. However, a finding made pursuant to the bill would not affect the priority of any lien or other security interest that were established prior to the date of the finding.

Author’s amendments. The bill in print allows a survivor of human trafficking to seek a finding that specific debts attributed to them were incurred “as the result of trafficking and without the consent of the plaintiff.” And while the bill allows the finding to be based upon “acts that . . . include but not are limited to the crimes proscribed by Section 530.5 of the Penal Code,” the current language does not otherwise provide guidance to a court about what types of acts a finding can be based upon. Therefore, it may be difficult for a survivor to prove that a debt was “incurred as the result of trafficking” and/or that Section 530.5 of the Penal Code (which establishes as crimes a number of financial crimes involving the illegal possession and use of personal identifying information of another person) was violated.

While Penal Code Section 530.5 describes a number of financial crimes, those certainly are not an exhaustive list of the illegal acts--whether civil or criminal -- that could lead to a survivor of human trafficking being forced to incur a debt. A more generic and useful description arguably is found in Section 1798.97.1, which deals with “coerced debt.” Pursuant to Section 1798.97.1 (d), “coerced debt” means “a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence.” Furthermore, any debt incurred as the result of an illegal act that victimizes a plaintiff -- who is established to be the survivor of human trafficking -- arguably should be the basis for the finding envisioned by the bill, especially when the debt is incurred without the plaintiff’s consent.

In order to address these issues and make other minor clarifying changes, the author proposes the following amendments to paragraph (2) of subdivision (b) of Section 52.5:

(2) A plaintiff may seek from the judge court a finding that specific debts attributed to the plaintiff were incurred as the result of trafficking and without the consent of the plaintiff. For purposes of this paragraph, the court may base its finding upon evidence that a debt attributed to the plaintiff was incurred as the result of any illegal act in which the plaintiff was the victim, including but not limited to the acts that may support this finding include but are not limited to, the crimes proscribed by a violation of Section 1798.97.2, or a violation of Section 530.5 of the Penal Code. A finding shall not affect the priority of any lien or other security interest.

The amendments also ensure that the Civil Rights Department (CRD) can pursue this remedy on behalf of a survivor’s behalf. CRD receives, investigates, and can prosecute complaints under Section 52.5, among other civil rights statutes. (See Government Code Section 12930 (f)(3).)

To make absolutely sure that the remedies under the bill would be available in a civil action brought by CRD on behalf of a trafficking survivor, the author also proposes to add Section 12965 of the Government Code to the bill and amend subdivision (d) of that section, which deals with the authority of the CRD to bring a civil action in the name of the department in the public interest, on behalf of the person claiming to be aggrieved, as follows:

(d) A court may grant as relief in any action filed pursuant to subdivision (a) any relief a court is empowered to grant in a civil action brought pursuant to subdivision (c), in addition to any other relief that, in the judgment of the court, will effectuate the purpose of this part. This relief may include a requirement that the employer conduct training for all employees, supervisors, and management on the requirements of this part, the rights and remedies of those who allege a violation of this part, and the employer’s internal grievance procedures. This relief may also include any relief available under any law enforced by the department pursuant to Section 12930. In addition, in order to vindicate the purposes and policies of this part, a court may assess against the defendant, if the civil complaint or amended civil complaint so prays, a civil penalty of up to twenty-five thousand dollars ($25,000) to be awarded to a person denied any right provided for by Section 51.7 of the Civil Code, as an unlawful practice prohibited under this part.

ARGUMENTS IN SUPPORT: Co-sponsor CAST writes the following about why the bill is needed:

Much like domestic violence awareness, one of the impacts of human trafficking that is often overlooked by the general public is the financial consequences to the survivor. For instance, the Allstate Foundation found that more than half of those surveyed were unaware of the impact of finance on survivors of domestic violence. And almost half of respondents agreed that financial abuse is the hardest form of abuse for outsiders to recognize.

Traffickers use financial abuse as a form of control over the survivor. Traffickers use tactics like debt bondage, where the survivor must work to pay back an alleged debt owed to a trafficker. Traffickers also frequently use coerced debt, or debt that the trafficker takes out in the survivor’s name, sometimes with the survivor’s knowledge, but without their consent, as a form of control. Traffickers will then remind the survivor that they will never be able to leave the trafficking situation because of their financial obligations.

SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced.

Co-sponsors Los Angeles Center for Law and Justice and Western Center on Law & Poverty write the following about how the bill will help relieve survivors of the financial burden of coerced debt:

SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced. That finding can then be used to dispute a debt with a credit reporting agency, and can be used as evidence to provide to a creditor or debt collector that they did not consent to the debt and therefore should not be liable. This bill will also educate judges of the availability of that relief, and encourage advocates and survivors to call out the financial consequences of trafficking, so that any impact may be addressed as part of the survivor’s overall economic recovery.

REGISTERED SUPPORT / OPPOSITION:

Support

Bet Tzedek Legal Services

California Low-income Consumer Coalition

Coalition to Abolish Slavery and Trafficking (CAST)

Los Angeles Center for Law and Justice

Western Center on Law & Poverty

Opposition

None on file

Analysis Prepared by: Alison Merrilees / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 727

Author: Limón (D)

Introduced: 2/17/23

Vote: 21

SENATE JUDICIARY COMMITTEE: 11-0, 5/2/23

AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Min, Niello, Stern, Wiener

SUBJECT: Human trafficking: civil actions

SOURCE: Western Center on Law and Poverty

DIGEST:

This bill authorizes a plaintiff in an action arising from human trafficking to seek a finding that specific debts were incurred as the result of the trafficking and without the consent of the plaintiff.

ANALYSIS:

Existing law:

1. Authorizes a victim of human trafficking, as defined, to bring a civil action for specified damages and relief. (Civ. Code § 52.5.)
2. Establishes the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts. (Civ. Code § 1788 et seq.)
3. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
4. Establishes the Consumer Credit Reporting Agencies Act. The Act prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Civ. Code § 1785.1 et seq.)
5. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Civ. Code § 1798.93 (Section 1798.93).)
6. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period. The order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Fam. Code § 6342.5.)
7. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
8. Establishes the Consumer Credit Reporting Agencies Act, which prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Civ. Code § 1785.1 et seq.)
9. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Civ. Code § 1798.93.)
10. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period. The order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Fam. Code § 6342.5.)
11. Requires a claimant to cease collection activities, as provided, and undertake a review of the relevant debt, if a debtor provides a sworn certification that the particular debt is a “coerced debt” and submits “adequate documentation.” (Civ. Code § 1798.97.2.)
12. Defines “coerced debt” as a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence. (Civ. Code § 1798.97.1.)
13. Authorizes an alleged debtor to bring an action against an alleged creditor to establish that the alleged creditor’s claim arises from a coerced debt. Authorizes a claimant to move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred. (Civ. Code § 1798.97.3.)
14. Provides that if the debtor establishes by a preponderance of the evidence that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment. (Civ. Code § 1798.97.3.)
15. Prohibits a person from causing another person to incur a coerced debt. A person in violation shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimant’s attorney’s fees and costs. (Civ. Code § 1798.97.2.)
16. Allows a creditor to collect against others and use all rights and remedies against a person who caused a coerced debt or against a person who benefited from a coerced debt, as provided. Exempts from the above provisions secured debts. (Civ. Code § 1798.97.3.)

This bill:

1. Authorizes a plaintiff in an action for damages resulting from human trafficking, to seek from the judge a finding that specific debts were incurred as the result of trafficking and without the consent of the plaintiff.
2. Provides that the acts that may support this finding include, but are not limited to, the crimes proscribed by Section 530.5 of the Penal Code.
3. Clarifies that a finding shall not affect the priority of any lien or other security interest.

Background

Current state law lays out the elements of the crime of human trafficking. Generally requiring a finding that a person deprived or violated the personal liberty of another with specified intent.

Oftentimes, a victim of human trafficking is subjected to economic abuse by the trafficker, incurring and leaving behind a sea of debts in the victim’s name. In order to assist victims to overcome the effects of this abuse, this bill authorizes plaintiffs in the civil actions described above to seek from the judge a finding that specific debts were incurred without their consent and as a result of human trafficking. The bill identifies a number of acts that support such a finding, including the unauthorized use of the personal identifying information of the victim to obtain credit or goods or services without the victim’s consent. The bill clarifies that such a finding does not affect the priority of any lien or other security interest. This bill is sponsored by Western Center on Law and Poverty. There is no known opposition.

Comments

Human trafficking is the world’s fastest growing criminal enterprise, bringing in annual profits in the tens of billions of dollars. Human trafficking is generally defined as the use of force, coercion, or fraud to obtain coerced labor or personal services. Existing law provides that any person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services is guilty of the crime of human trafficking.

The International Labour Organization estimates that approximately 40 million people were victims of some form of human slavery worldwide in 2016.^[1] This includes 24.9 million in forced labor, meaning they were being “forced to work under threat or coercion as domestic workers, on construction sites, in clandestine factories, on farms and fishing boats, in other sectors, and in the sex industry.” Over 70 percent of these victims were women and girls and 1 in four victims were children. In their 2019 Data Report, the U.S. National Human Trafficking Hotline (NHTH) identified over 22,000 victims and survivors and over 4,300 traffickers.^[2]

The U.S. State Department has estimated that the incidence of human trafficking and slavery has only gotten worse during the COVID-19 pandemic:

The economic and social distress generated by the pandemic and related mitigation efforts exacerbated risks for vulnerable and marginalized populations. These included women and children, people affected by travel restrictions and stay-at-home orders, communities in areas of food insecurity, and survivors of trafficking, as well as persons directly and indirectly affected by the disruption of economic activities and reduced livelihood options. Due to school closures, some children lacked access to education, shelter, and/or food. Survivors of trafficking faced an increased risk of potential re-victimization due to financial and emotional hardships during the crisis. ^[3]

Traffickers look for people who are susceptible for a variety of reasons, including psychological or emotional vulnerability, lack of a social safety net, natural disasters, political instability, or economic hardship.

Relevant here, the financial distress of these victims only gets worse. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives.^[4]

The CFPB details the potential consequences:

• Unemployment, costly insurance, and limited housing options. [Credit reporting agencies (CRA)] collect consumers’ credit information, including payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of credit relationships. Consumer reports can inform a company’s decision about whether to make a job offer, an insurance company’s decision on whether to provide insurance and at what cost, a bank’s mortgage or a landlord’s rental decision, and even a utility company’s decision on whether to require a deposit before turning on the lights. Negative information on credit reports, regardless of validity or accuracy, can severely limit survivors’ abilities to rebuild their lives.
• Bills, charges, and expensive credit lines. Survivors are often left with the bills and charges racked up by traffickers in survivors’ names and on their accounts. In addition to having to manage the actual bills and charges, if outstanding bills and charges are reported to CRAs, survivors can face prohibitively high costs to access the credit essential to restoring their financial stability.

Signed into law in December 2021, the Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain negative information about a survivor of trafficking from any period the survivor was being trafficked. The CFPB issued rules to prevent CRAs from including negative information resulting from abuse; CFPB Director Rohit Chopra explained: “As survivors of human trafficking go through the recovery process, they shouldn't be penalized for abuse they have endured. The CFPB's proposal will help ensure that survivors can work to rebuild their lives, including accessing credit, opening a bank account, and finding a job.”^[5]

This bill seeks to similarly assist survivors of human trafficking as they look to deal with the financial fallout of being trafficked.

Rebuilding survivors’ lives

Section 236.1 of the Penal Code lays out the elements of the crime of human trafficking. The law provides that a person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services or to carry out a violation of specified crimes against children, is guilty of human trafficking.

In order to provide victims of such trafficking the ability to make themselves whole, Section 52.5 of the Civil Code provides them a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief. Section 52.5 further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages.

This bill provides another level of protection for these victims by authorizing them to seek a finding that specific debts were incurred as a result of trafficking and were incurred without the victim’s consent.

According to the author:

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

This follows related legislation that has focused on victims of financial abuse. Similar language to this bill is found in AB 2517 (Gloria, Chapter 245, Statutes of 2020). AB 2517 authorized courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the victim. In addition, AB 1243 (B. Rubio, Chapter 273, Statutes of 2021) provided that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse.

Last year, SB 975 (Min, Chapter 989, Statutes of 2022) created a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. SB 975 authorized a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such “coerced debts” and a cause of action against the perpetrator in favor of the claimant.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 5/3/23)

Western Center on Law and Poverty (source)

OPPOSITION: (Verified 5/3/23)

None received

ARGUMENTS IN SUPPORT: The Western Center on Law and Poverty writes: “SB 727 will provide a path to financial freedom, so that not only is the survivor able to obtain monetary relief, but they are also able to get findings, made by a judge, that a particular debt is coerced. That finding can then be used to dispute a debt with a credit reporting agency, and can be used as evidence to provide to a creditor or debt collector that they did not consent to the debt and therefore should not be liable. This bill will also educate judges of the availability of that relief, and encourage advocates and survivors to call out the financial consequences of trafficking, so that any impact may be addressed as part of the survivor’s overall economic recovery.”

Prepared by: Christian Kurpiewski / JUD. / (916) 651-4113

5/5/23 13:17:58

**** END ****

1. Global Estimates of Modern Slavery (2017) International Labour Organization, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_575479.pdf. All internet citations are current as of April 24, 2023. ↑

2. 2019 Data Report, U.S. National Human Trafficking Hotline, https://humantraffickinghotline.org/sites/default/files/Polaris-2019-US-National-Human-Trafficking-Hotline-Data-Report.pdf. ↑

3. Trafficking in Persons Report (June 2021) United States Department of State, https://www.state.gov/wp-content/uploads/2021/09/TIPR-GPA-upload-07222021.pdf. ↑

4. CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/. ↑

5. Ibid. ↑

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 727 (Author:Limón)

Version: February 17, 2023

Hearing Date: May 2, 2023

Fiscal: No

Urgency: No

Consultant: CK

SUBJECT

Human trafficking: civil actions

DIGEST

This bill authorizes a plaintiff in an action arising from human trafficking to seek a finding that specific debts were incurred as the result of the trafficking and without the consent of the plaintiff.

EXECUTIVE SUMMARY

Current state law lays out the elements of the crime of human trafficking. Generally requiring a finding that a person deprived or violated the personal liberty of another with specified intent.

Oftentimes, a victim of human trafficking is subjected to economic abuse by the trafficker, incurring and leaving behind a sea of debts in the victim’s name. In order to assist victims to overcome the effects of this abuse, this bill authorizes plaintiffs in the civil actions described above to seek from the judge a finding that specific debts were incurred without their consent and as a result of human trafficking. The bill identifies a number of acts that support such a finding, including the unauthorized use of the personal identifying information of the victim to obtain credit or goods or services without the victim’s consent. The bill clarifies that such a finding does not affect the priority of any lien or other security interest.

This bill is sponsored by Western Center on Law and Poverty. There is no known opposition.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Authorizes a victim of human trafficking, as defined, to bring a civil action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief. A prevailing plaintiff may also be awarded attorney’s fees and costs. The plaintiff may also be awarded up to three times their actual damages or $10,000, whichever is greater. In addition, punitive damages may be awarded upon proof of the defendant’s malice, oppression, fraud, or duress in committing the act of human trafficking. (Civ. Code § 52.5.)
2. Requires that the above action be commenced within seven years of the date on which the trafficking victim was freed from the trafficking situation or, if the victim was a minor when the act of human trafficking against the victim occurred, within 10 years after the date the plaintiff attains the age of majority, except as specified. (Civ. Code § 52.5.)
3. Establishes the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts. (Civ. Code § 1788 et seq.)
4. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
5. Establishes the Consumer Credit Reporting Agencies Act. The Act prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Civ. Code § 1785.1 et seq.)
6. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Civ. Code § 1798.93 (Section 1798.93).)
7. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period. The order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Fam. Code § 6342.5.)
8. Establishes the Rosenthal Fair Debt Collection Practices Act to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts. (Civ. Code § 1788 et seq.)
9. Requires a debt collector to cease collection activities until completion of a review upon receipt of specified documentation. (Civ. Code § 1788.18.)
10. Establishes the Consumer Credit Reporting Agencies Act. The Act prohibits creditors from selling a consumer debt to a debt collector if the consumer is a victim of identity theft, as defined, and with respect to that debt, the creditor has received notice, as provided. (Civ. Code § 1785.1 et seq.)
11. Authorizes a victim of identity theft to obtain a civil judgment establishing they are not the person liable for specified debts incurred as a result, enjoining attempts to collect on such debts from the victim, and awarding damages, civil penalties, and attorneys’ fees for collection actions when the victim gave written notice of the judgment to the creditor that their identity had been stolen, as provided. (Civ. Code § 1798.93 (Section 1798.93).)
12. Authorizes a court to issue an order determining the use, possession, and control of real or personal property of the parties during the period a domestic violence prevention order is in effect and the payment of any liens or encumbrances coming due during that period. The order may include a finding that specific debts were incurred as the result of domestic violence and without the consent of a party. (Fam. Code § 6342.5.)
13. Requires a claimant to cease collection activities, as provided, and undertake a review of the relevant debt, if a debtor provides a sworn certification that the particular debt is a “coerced debt” and submits “adequate documentation.” (Civ. Code § 1798.97.2.)
14. Defines “coerced debt” as a particular debt, or portion thereof, for personal, family, or household use in the name of a debtor who is a victim of domestic violence, or a victim of elder or dependent adult abuse, or a person who is a foster youth, incurred as a result of duress, intimidation, threat of force, force, fraud, or undue influence. (Civ. Code § 1798.97.1.)
15. Defines “adequate documentation” as documentation that identifies a particular debt, or portion thereof, as coerced debt, describes the circumstances under which the coerced debt was incurred, and is one of a specified set of documentation. (Civ. Code § 1798.97.1.)
16. Authorizes an alleged debtor to bring an action against an alleged creditor to establish that the alleged creditor’s claim arises from a coerced debt. In an action brought by an alleged creditor to recover a claim against the alleged debtor, the alleged debtor may file a cross-complaint against the alleged creditor to establish that the claim is a coerced debt. (Civ. Code § 1798.97.3.)
17. Requires an alleged debtor to plead the allegations of coerced debt with particularity and to attach adequate documentation and a sworn written certification to the complaint or cross-complaint, as provided. (Civ. Code § 1798.97.3.)
18. Authorizes a claimant to move the court to make written findings regarding evidence related to the person who caused the coerced debt to be incurred. (Civ. Code § 1798.97.3.)
19. Provides that if the debtor establishes by a preponderance of the evidence that the particular debt, or portion thereof, is coerced debt, the court shall issue a judgment in favor of the claimant against the person or persons who coerced the debtor into incurring the debt in the amount of the debt, or portion thereof, that is coerced debt, provided that the person or persons who coerced the debtor into incurring the debt or debts has been brought within the jurisdiction of the court and joined as a party to the action and the evidence supports such a judgment. (Civ. Code § 1798.97.3.)
20. Prohibits a person from causing another person to incur a coerced debt. A person in violation shall be civilly liable to the claimant for the amount of the debt, or portion thereof, determined by a court to be coerced debt, plus the claimant’s attorney’s fees and costs. (Civ. Code § 1798.97.2.)
21. Allows a creditor to collect against others and use all rights and remedies against a person who caused a coerced debt or against a person who benefited from a coerced debt, as provided. (Civ. Code § 1798.97.3.)
22. Exempts from the above provisions secured debts. (Civ. Code § 1798.97.3.)

This bill:

1. Authorizes a plaintiff in an action for damages resulting from human trafficking, to seek from the judge a finding that specific debts were incurred as the result of trafficking and without the consent of the plaintiff.
2. Provides that the acts that may support this finding include, but are not limited to, the crimes proscribed by Section 530.5 of the Penal Code.
3. Clarifies that a finding shall not affect the priority of any lien or other security interest.

COMMENTS

1. Human trafficking

Human trafficking is the world’s fastest growing criminal enterprise, bringing in annual profits in the tens of billions of dollars. Human trafficking is generally defined as the use of force, coercion, or fraud to obtain coerced labor or personal services. Existing law provides that any person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services is guilty of the crime of human trafficking.

The International Labour Organization estimates that approximately 40 million people were victims of some form of human slavery worldwide in 2016.^[1] This includes 24.9 million in forced labor, meaning they were being “forced to work under threat or coercion as domestic workers, on construction sites, in clandestine factories, on farms and fishing boats, in other sectors, and in the sex industry.” Over 70 percent of these victims were women and girls and 1 in four victims were children. In their 2019 Data Report, the U.S. National Human Trafficking Hotline (NHTH) identified over 22,000 victims and survivors and over 4,300 traffickers.^[2]

The U.S. State Department has estimated that the incidence of human trafficking and slavery has only gotten worse during the COVID-19 pandemic:

The economic and social distress generated by the pandemic and related mitigation efforts exacerbated risks for vulnerable and marginalized populations. These included women and children, people affected by travel restrictions and stay-at-home orders, communities in areas of food insecurity, and survivors of trafficking, as well as persons directly and indirectly affected by the disruption of economic activities and reduced livelihood options. Due to school closures, some children lacked access to education, shelter, and/or food. Survivors of trafficking faced an increased risk of potential re-victimization due to financial and emotional hardships during the crisis. ^[3]

Traffickers look for people who are susceptible for a variety of reasons, including psychological or emotional vulnerability, lack of a social safety net, natural disasters, political instability, or economic hardship.

Relevant here, the financial distress of these victims only gets worse. As the federal Consumer Financial Protection Bureau (CFPB) describes it:

While being trafficked, many victims suffer from financial abuse, which is a common tactic used by traffickers to further exploit victims. Survivors and support organizations report that traffickers employ financial abuse as a means to earn money and as a method of control. After destroying their victims’ credit history and racking up charges in their names, traffickers know their victims will be unable to rent an apartment, purchase a car to go to work, or even find a job with a living wage.

The consequences of financial abuse often follow survivors as they attempt to rebuild their financial lives.^[4]

The CFPB details the potential consequences:

• Unemployment, costly insurance, and limited housing options. [Credit reporting agencies (CRA)] collect consumers’ credit information, including payment histories, debt loads, maximum credit limits, names and addresses of current creditors, and other elements of credit relationships. Consumer reports can inform a company’s decision about whether to make a job offer, an insurance company’s decision on whether to provide insurance and at what cost, a bank’s mortgage or a landlord’s rental decision, and even a utility company’s decision on whether to require a deposit before turning on the lights. Negative information on credit reports, regardless of validity or accuracy, can severely limit survivors’ abilities to rebuild their lives.
• Bills, charges, and expensive credit lines. Survivors are often left with the bills and charges racked up by traffickers in survivors’ names and on their accounts. In addition to having to manage the actual bills and charges, if outstanding bills and charges are reported to CRAs, survivors can face prohibitively high costs to access the credit essential to restoring their financial stability.

Signed into law in December 2021, the Debt Bondage Repair Act prohibits CRAs from providing consumer reports that contain negative information about a survivor of trafficking from any period the survivor was being trafficked. The CFPB issued rules to prevent CRAs from including negative information resulting from abuse; CFPB Director Rohit Chopra explained: “As survivors of human trafficking go through the recovery process, they shouldn't be penalized for abuse they have endured. The CFPB's proposal will help ensure that survivors can work to rebuild their lives, including accessing credit, opening a bank account, and finding a job.”^[5]

This bill seeks to similarly assist survivors of human trafficking as they look to deal with the financial fallout of being trafficked.

1. Rebuilding survivors’ lives

Section 236.1 of the Penal Code lays out the elements of the crime of human trafficking. The law provides that a person who deprives or violates the personal liberty of another with the intent to obtain forced labor or services or to carry out a violation of specified crimes against children, is guilty of human trafficking.

In order to provide victims of such trafficking the ability to make themselves whole, Section 52.5 of the Civil Code provides them a cause of action for actual damages, compensatory damages, punitive damages, injunctive relief, any combination of those, or any other appropriate relief. Section 52.5 further authorizes a plaintiff to be awarded up to three times the plaintiff’s actual damages or $10,000, whichever is greater. A prevailing plaintiff may also be awarded attorney’s fees, costs, and punitive damages.

This bill provides another level of protection for these victims by authorizing them to seek a finding that specific debts were incurred as a result of trafficking and were incurred without the victim’s consent.

According to the author:

Economic coercion plays a significant role in human trafficking. Individuals who experience coerced debt commonly face years of debt repayment, financial and housing instability, and even poverty. SB 727 will help break this cycle of abuse by establishing crucial consumer and credit protections for human trafficking survivors who have been coerced into taking on debt without their consent. The bill prohibits creditors and debt collectors from collecting this debt. By recognizing coerced debt as abuse, we can further define control over finances as being central to autonomy, safety and security.

This follows related legislation that has focused on victims of financial abuse. Similar language to this bill is found in AB 2517 (Gloria, Ch. 245, Stats. 2020). AB 2517 authorizes courts to make a finding in a domestic violence restraining order issued after notice and a hearing that specific debts were incurred as a result of domestic violence and without the consent of the victim. In addition, AB 1243 (B. Rubio, Ch. 273, Stats. 2021) provides that restraining orders for elder or dependent adults may include certain remedies related to financial abuse or isolation, including a finding that specific debts were incurred as a result of financial abuse.

Last year, SB 975 (Min, Ch. 989, Stats. 2022) created a non-judicial process for addressing a debt incurred in the name of a debtor through duress, intimidation, threat, force, or fraud of the debtor’s resources or personal information for personal gain. SB 975 authorizes a cause of action through which a debtor can enjoin a creditor from holding the debtor personally liable for such “coerced debts” and a cause of action against the perpetrator in favor of the claimant.

SUPPORT

Western Center on Law & Poverty (co-sponsor)

OPPOSITION

None known

RELATED LEGISLATION

Pending Legislation: SB 278 (Dodd, 2023) provides that a person who assists in taking, secreting, appropriating, obtaining, or retaining property for a wrongful use has committed financial abuse, if the person knew or should have known that this conduct is likely to be harmful to an elder or dependent adult. SB 278 is set to be heard in this Committee the same day as this bill.

Prior Legislation:

SB 975 (Min, Ch. 989, Stats. 2022) See Comment 2.

AB 2553 (Grayson, 2022) would have established the California Multidisciplinary Alliance to Stop Trafficking Act to review collaborative models between governmental and nongovernmental organizations for protecting victims and survivors of trafficking, among other related duties. AB 2553 died in the Senate Appropriations Committee.

SB 373 (Min, 2021) would have prohibited a debt collector from collecting or attempting to collect a consumer debt if the consumer provides documentation, as specified, to the debt collector that the debt, or any portion of the debt, is the result of economic abuse, as defined. The bill would have prohibited a debt collector from requiring a court order or a police report to prove that the debt is the result of economic abuse. This bill died in the Senate Banking and Financial Institutions Committee.

AB 430 (Grayson, Ch. 265, Stats. 2021) allowed the use of a Federal Trade Commission identity theft report, in lieu of a police report, when a victim of identity theft seeks civil protections pursuant to the Rosenthal Fair Debt Collection Practices Act, the Identity Theft Law, and the Penal Code, as specified.

AB 1243 (B. Rubio, Ch. 273, Stats. 2021) See Comment 2.

SB 1141 (Rubio, Ch. 248, Stats. 2020) codifies and elaborates on case law defining when a restraining order under the Domestic Violence Prevention Act may be issued because a person was “disturbing the peace of the other party,” which includes coercive control.

AB 2517 (Gloria, Ch. 245, Stats. 2020) See Comment 2.

**************

1. Global Estimates of Modern Slavery (2017) International Labour Organization, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_575479.pdf. All internet citations are current as of April 24, 2023. ↑

2. 2019 Data Report, U.S. National Human Trafficking Hotline, https://humantraffickinghotline.org/sites/default/files/Polaris-2019-US-National-Human-Trafficking-Hotline-Data-Report.pdf. ↑

3. Trafficking in Persons Report (June 2021) United States Department of State, https://www.state.gov/wp-content/uploads/2021/09/TIPR-GPA-upload-07222021.pdf. ↑

4. CFPB Seeks to Halt Negative Credit Reporting for Survivors of Human Trafficking (Apr. 7, 2022) CFPB, https://www.consumerfinance.gov/about-us/newsroom/cfpb-seeks-to-halt-negative-credit-reporting-for-survivors-of-human-trafficking/. ↑

5. Ibid. ↑