The risk of a $500,000 fine or up to 10 years in jail has not eliminated paid surrogacy among infertile couples in Canada but has driven the practice underground, a CBC News investigation has found.

Under the Assisted Human Reproduction Technology Act passed in 2004, a surrogate who carries a fetus for others may be reimbursed for expenses such as prenatal vitamins and costs of travelling to the doctor. She cannot receive any sort of wage for carrying the child.

A surrogate takes fertility drugs and progesterone injections to prepare her body to carry embryos from another couple.

The law is vague, and no one is sure which expenses are legitimate, said Stephanie Scott, who runs a surrogacy agency in Texas, where surrogates who work for her may be paid up to $25,000 US plus expenses for carrying the child.

The uncertainty surrounding the Canadian law has created a chill among infertile couples, Scott said.

"They're afraid to do it in Canada. A lot of people think they're going to go to jail," said Scott. "If they send their surrogate, you know, $600 for her rent or whatever, they try to pay it in cash, under the table, so there's no paper trails."

Despite the cost of travel, paying in U.S. dollars, not being near the woman carrying their child, and missing out on going to ultrasound appointments, some Canadians go to American agencies.

A Canadian surrogate said she met many couples who feel so constrained by the limits of the law that they simply go underground and meet willing women on the internet.

Many Canadian couples want to pay their surrogates, and do so, in cash and gifts. If caught, they face penalties.

The terms create a potentially dangerous situation for couples trying to conceive, said one woman. CBC News agreed not to use her name to protect the couples she has worked for.

"Couples that I've spoken to have been ripped off, because of their own fear, forced to go without contracts," she said, adding they might not have to if the law is changed." Or, go with surrogates that maybe are a little bit less desirable to them because they're just desperate."

In June, Health Canada will begin a consultation process on the question of compensation for surrogates, and egg and sperm donors.