Clemency Jacques, a carer for her disabled son, was told by Department for Work and Pensions (DWP) investigators her case would be referred to the Crown Prosecution Service (CPS) unless she paid a 50% charge on top of an existing agreement to repay £2,600 in carer's allowance overpayments a total of £3,900.
Jacques, 43, a former NHS psychologist, who cares for her severely disabled son and frail elderly mother, said she was threatened with prosecution even though the DWP accepted she had made an "unintentional error."
Jacques's treatment was condemned as a "disgrace" and "inhumane" by politicians and campaigners amid growing concern over the DWP's policy of prosecuting - or threatening with prosecution - carers who unwittingly breach carer's allowance benefit earnings rules by relatively minor amounts.
"Agreeing to the administrative penalty feels more like blackmail than an actual choice. It's like: 'Say how naughty you have been and pay a large chunk of money or we will send you to court and punish you for being a stressed-out carer,' Jacques said.
The Liberal Democrat leader, Ed Davey, who is a carer for his disabled teenage son, said: "The fact the government is forcing carers to chose between an expensive fine or a criminal record, just for making an innocent mistake, is a disgrace."
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