By Mark Lee

By year-end 2019, 25 federal lawsuits had been filed on behalf of anonymous victims against major hotel chains in locations from Arkansas to New York that were accused of having profited from the sex trafficking of women and children.

This is a new sweet spot for the plaintiffs’ lawyers and is underscoring the persistence of the sex trafficking problem, the hotel industry’s role in it, and the liability it faces for failing to address it. With damages in some civil cases surpassing $1 million, and the prospect of insurers declining claims, it’s time for the industry to clamp down.

Human trafficking is not solely the third-world problem many in the U.S. would think, and the data paints an alarming picture:

  • The U.S. State Department estimates that between 15,000 to 20,000 women and girls are trafficked here annually, and two-thirds of the victims are believed to be U.S. citizens.
  • Over half of the active sex trafficking cases in 2018 involved children alone.
  • The average age of a teen entering the sex trade in the U.S. is 12-14, often runaway girls who were abused as children.

Sex trafficking seems to be hidden in plain sight in hotels. That’s partially due to employment practices and corporate cultures that may foster a lack of awareness and sex trafficking detection training, sometimes less-than-rigorous background checks of employees, and the potential of compromised ethics when customer care is involved. And automation of hospitality operations like reservations, check-ins and check-outs only encourages the environment of anonymity in which trafficking thrives.

The growing problem has led various states to require the industry to provide staff training on detection and prevention or to at least display signage about the issue to create awareness. California, for example, sees more reports of human trafficking than any other state, a vulnerability stemming from its international borders, number of ports and airports and large economy. This year, effective January 1, California is mandating that 20 minutes of human trafficking awareness training be provided for any hotel or motel employee who might interact with a victim. (And on January 1, 2021, the state will require the same training for public transit workers.)

Even where training isn’t mandated, insurers have put hotel clients on notice to take steps to head off traffickers. The ethical and moral risk of doing nothing should go without saying. But the legal risks (complicity), operational risks (business disruption) and reputational risks (financial hits) make a case for keeping appropriate liability coverage. Risk management starts with a thorough policy that outlines your organization’s values and provides guidelines on prevention. This should be paired with training and education for new employees that’s refreshed annually.

Training can cover considerable ground, but too much information is better than not enough. Misidentification of a trafficking situation happens when employees are inadequately trained and can put a hotel in a tough position. Your training must cover:

  • Definitions of “human trafficking” and “commercial exploitation of children”;
  • How to identify those most at-risk;
  • How to report and respond to suspected human trafficking;
  • Contact information for appropriate agencies, including the National Trafficking Hotline and local law enforcement.

The U.S. Department of Homeland Security’s Blue Campaign to end human trafficking offers the hospitality industry an extensive toolkit with components that are geared to specific areas of customer service, like the front desk, housekeeping, concierge and security and good and beverage.

HUB International’s team of brokers is available to help your hospitality organization understand and manage its risk and insurance concerns.