By Stacy Francis, CFP®, CDFA®, CES™
While financial abuse affects both men and women, women are more frequently the victims. According to the Bureau of Justice Statistics, 85% of domestic violence victims are women, and unfortunately, the number of incidents is rising. The recent statistics about abuse during the pandemic are worrisome, showing a spike in 911 calls reporting violence against women. States such as New York found that domestic violence reports were up over 30% in April 2020, compared to the year before.
According to UN Women, one in three women worldwide experiences physical or sexual abuse, primarily inflicted on them by a romantic partner. Moreover, since the outbreak of COVID-19, UN Women shares that emerging data shows that domestic violence has intensified and is not going away. In fact, due to increasing financial stress and mental health issues, many families remain at an elevated risk for domestic violence.
Financial abuse is present in nearly all (99%) domestic violence situations. While some kinds of abuse are hard to spot, financial abuse is among the most insidious. The abuser’s goal is to gain power over their partner, threaten their financial well-being and make the victim feel they cannot leave, creating a situation where they feel locked into an unhealthy and potentially dangerous relationship.
What Is Financial Abuse?
What is the official definition of financial abuse? The Center for Financial Security denotes financial abuse as “controlling a person’s ability to acquire, use, and maintain economic resources.”
According to Victoria McCooey, divorce coach and founder of the Reclaim Your Power System, “The abuser’s goal is to restrict their partner’s freedom slowly, over time, making them more and more dependent on the abuser.”
Unfortunately, financial abuse is difficult to convict. Forging a signature on financial documents or using one’s partner’s credit card without permission is considered a criminal offense. However, most financial abuse incidents are dealt with as civil matters, with few penalties. While some states have laws to protect victims, no national legislation exists, yet. Most of the recent gains put in place to prevent financial exploitation are focused on elderly adults and not on offenses inflicted by an intimate partner.
This form of abusive behavior can be difficult for friends and even family members to recognize. McCooey, who has devoted her life to helping women, like her, who have lived through financial abuse, shares, “From the outside, no one would have ever guessed what was going on in my marriage. I was the breadwinner, so most people expected that I played a part in our finances. Instead, my paycheck was immediately transferred on payday from my account into his, leaving me with no access to my income. My ex withheld everything and then used money as power over me to control and manipulate me.”
Traditional gender norms in heterosexual relationships have often normalized the male partner’s more active role in marital finances, making financial abuse even harder to spot. However, there are numerous warning signs to look for when identifying financial abuse.
Controlling Spending
The abuser may try to control their partner’s spending or give them an unworkable allowance. Financial abuse survivors share stories of the fear of making even small essential purchases. Avani Ramnani, CFP, CDFA, CPWA, director of finance and wealth management at Francis Financial, recalls that one of her divorcing clients (we will call her Megan) had to beg for money to purchase new school shoes for her three girls, as well as gas to drive them to school. Megan’s husband claimed that there was no money for these purchases. During her divorce, Megan was stunned to learn that her husband made over three-quarters of a million dollars a year and had squirreled away over $5 million for himself in savings.
Ramnani recounts the story of another divorcing client, whom we’ll call Denise. Denise’s husband called all the credit card companies to ensure that he was notified about all her credit card charges, no matter how small. Denise knew that she would get a harassing phone call after each purchase and would need to show receipts to justify them.
McCooey, of Reclaim Your Power, recalls the incredible anxiety she felt while waiting in the checkout line at the grocery store. “Before shopping, I was forced to produce a list of what we needed with the price of each item. He would then delete items he felt weren’t necessary, then give me the recalculated amount — to the penny — in cash. If I saw something I needed at the store that wasn’t on the list, I’d have to do mental math to figure out what I could give up to make the purchase. I had to be precise, because I had no credit or debit card to pay for any overage. You can imagine the stress of grocery shopping this way with three small children in tow.”
Hiding Assets
Withholding financial information or hiding assets is also common. According to the National Endowment of Financial Education, far more marriages experience financial deception than you might think. Forty-three percent of respondents lie regularly to romantic partners about outstanding debts, finances and their earnings.
It is challenging to leave a partnership if you are unsure if you can provide for yourself and your children, financially. Abusers know this and withhold information about marital finances to trap their partners in the relationship.
Ramnani shares, “Be sure to collect as many financial documents as possible. For example, photograph letters from financial institutions addressed to your spouse so that you know where they are banking and/or holding money. This information will help your team find hidden accounts or debts. Also, order a tax return from the government at www.irs.gov. The tax return can share a wealth of information, including the existence of bank, brokerage and retirement accounts. We have even found real estate, automobiles and businesses from evidence we gathered on the tax return.”
Committing Financial Infidelity
Financial infidelity can come in many forms. For example, your partner might lie about the real cost of what they are buying or even hide purchases from you. This financial dishonesty might happen because of an affair, compulsive shopping addiction, drug or alcohol habit or gambling.
According to Lisa Zeiderman, managing partner of the law firm Miller Zeiderman, LLP, who focuses her law practice on matrimonial and family law, “Common warning signs include frequent trips to the ATM for cash withdrawals, the opening of new credits cards, removal of your name from an account or taking out money from brokerage or retirement accounts.”
Taking Out Loans in Your Name
If the victim of a financially abusive relationship is able to get out, the remnants of their abusive relationship often follow them, leaving a long-term financial impact. Your credit score might be decimated, especially if the controlling person took out credit cards or other loans in your name. Zeiderman advises, “Getting a copy of your credit report is key to understanding the extent of the illegal financial activity. You can go to AnnualCreditReport.com to see your credit reports from the three reporting agencies — Experian, TransUnion and Equifax.”
Large debts and poor credit scores can make your life much harder. According to Zeiderman, “A low credit score can make getting a credit card in your name or even a cell phone nearly impossible. Not only will interest rates on loans and insurance premiums be higher, but some employers will check your credit score before making a job offer to you, restricting your ability to earn a living.”
Ramnani adds, “One of our clients left her marriage with a credit score of less than 550 because her husband took out so many loans in her name. As a result, she had to pay one year’s rent in advance to get an apartment. Not only was this a huge financial burden for her, but it also limited the number of apartments she could lease.”
Sabotaging Your Career
Some abusers may not allow their partner to work, force them to quit or sabotage their career. For example, the controlling partner might make it difficult for their partner to commute by confiscating the car, making them late, calling the office numerous times. The abuser may even show up at the victim’s place of business, hurling threats against the spouse or their fellow employees.
A Corporate Alliance to End Partner Violence survey found that nearly half (40%) of domestic violence victims struggled because their abusers harassed them on the phone and in person while at their place of business.
This behavior can escalate into physical abuse. As a strong advocate for financial abuse victims, Zeiderman encourages women in this situation to hire an attorney and financial adviser who understand the unique issues of financial abuse and will help untangle the web of deceptions, manipulation and lies to ensure you have the resources you need to build a secure financial future.
If you feel you may be a victim of financial abuse, reach out to the National Relationship Abuse Hotline at 800-799-7233. You can also visit their website.
This article was originally published on Kiplinger on 2/19/2023.
