For Love or Money? The Subtly Corrosive Impact of Financial Abuse
Money is a powerful tool that can be used to isolate and control. There may be no physical bruises, but the scars of financial abuse are still clearly visible in a victim’s bank statement, credit report and eroded financial confidence.
This widespread form of abuse remains the hidden face of domestic violence, as it is too often dismissed as an expression of love, a sign of old-fashioned gender roles or a consequence of poor financial decision making.
Financial abuse can manifest in many ways. Every case is different. Some victims are controlled and isolated through the abuser restricting their access to money, for example, not allowing them to work or giving them a diminutive allowance that barely covers their basic living expenses.
At the other end of the spectrum, victims are exploited and left with the full burden of what should be joint financial responsibilities, such as being made to pay for everything and forcing them to take out credit cards and loans that they do not get any benefit from.
There may be no physical bruises, but the scars of financial abuse are still clearly visible in a victim’s bank statement, credit report and eroded financial confidence
Many victims experience financial sabotage that persists well beyond the end of a relationship when the abuser deliberately defaults on joint loans to damage the victim’s previously good credit history. These abuse behaviours are often subtle and corroding, and ultimately render the victim under the complete control of their abuser. Like the frog put in a pot of tepid water and then brought to a boil slowly, victims will not perceive the danger because the threat arises gradually.
Financial abuse is one of the main reasons why a person will remain in or return to a violent relationship. Debts and eroded financial confidence can trap and prevent victims from being able to leave, and even if they manage to escape, it can cripple them financially, leading to a lifetime struggle to make ends meet.
No person is immune, regardless of age, gender, wealth and education level, but women are reported to be the most affected group, particularly migrant women and women with disabilities. Among women who have sought help from domestic violence services, up to 90% have experienced financial abuse.
As research into financial abuse develops, the law needs to catch up, particularly New South Wales, which is one of the few states that does not recognise financial abuse as a form of domestic violence.
Interestingly, some of the major banks have recognised financial abuse as an important issue affecting their customers and implemented domestic violence policies, despite the lack of interest from legislators. Where the law is lacking, advocates are working to fill those gaps with various industry guidelines to offer remedies where court outcomes are lacking.
These abuse behaviours are often subtle and corroding, and ultimately render the victim under the complete control of their abuser.
Regaining Control: Identifying and Assisting Financial Abuse Victims
Over the last few years, RLC has noticed an increased number of people who have experienced financial abuse contacting our centre for advice and representation. The Sydney Women’s Domestic Violence Court Advocacy Service plays an important role in identifying and referring women to seek the assistance of the credit, debt and consumer law team at RLC.
In our experience, very few people will seek legal help directly for financial abuse; often people will say that they are just “bad with money” or “unable to get anything back”. This is not the case at all, RLC has had great success in investigating cases of financial abuse and empowering people with advice on legal action and negotiating outcomes such as waivers, reduction of debt, payment plans, cancelling or severing contracts as well as some refunds and compensation.
Every victim we have assisted with financial abuse issues, has also needed advice for other legal matters, for example, in areas such as tenancy law, employment law, family law and victim’s compensation. There are also critical social and welfare needs that we facilitate referrals for, such as domestic violence counselling, safety planning, crisis accommodation, Centrelink payments, financial counselling, social work and so on. The list is endless. As such, the community sector is best placed to identify financial abuse and assist victims in a holistic way to regain their financial independence.
Our client-centred service delivery ensures that victims feel supported, empowered and in control of their legal matter to allow them to seek the solutions they need on their journey to rebuilding safety and independence. This can be extremely challenging for victims at first because they haven’t had the freedom to make their own decisions before.
It is incredible to witness how much satisfaction a victim can get from finally feeling like they have a voice and to be heard for the first time in a long time, or for some, maybe ever.
According to research done by WIRE in 2014, among women who have sought help from domestic violence services, up to 90% have experienced financial abuse.
As society’s awareness and understanding of financial abuse grows, so too will the need for legal assistance in this area. In response to this issue, RLC launched Our statewide Financial Abuse Legal Service in 2018.
A core part of this work will be seeking greater involvement in initiatives that encourage banks, telecommunications providers, utilities companies and other creditors to create and implement family violence policies, train frontline staff and provide meaningful outcomes to victims.
By failing to categorise financial abuse as a form of domestic violence we will continue to short change victims. It is only through a wholistic approach involving legislative change, industry action and community education that we can stamp out the growing scourge of domestic abuse. RLC’s Financial Abuse Project will work hard to achieve these aims.
Anna's Story
When Anna* met David*, she had moved from the UK some years prior and had established herself in Sydney with long term stable employment and good rental history.*
Anna and David first moved in together as friends but after a few months, it progressed into a romantic relationship. Anna started working for David’s business. She was promised a weekly salary and worked extremely hard, often after hours and on weekends. David withheld wages from Anna and she was never paid for any of her work. When Anna’s savings were diminished, she was struggling without any income so she obtained a credit card. When David found out, he encouraged her to make him a second card holder and used the card for his personal and business expenses. He also took out an expensive phone contract in her name.
Throughout the relationship, David was extremely violent assaulting Anna frequently. Anna bravely described occasions when she was strangled or run over by a car. Despite Anna getting an ADVO, David continued to intimidate Anna by regularly showing up at the front of her house at all hours of the night.
Anna was within days of being terminated from her rental accommodation because, unbeknownst to her until they separated, David never paid the rent so she was left with thousands of dollars of arrears, in addition to tens of thousands of credit card debt and other bills. Anna was going to be made homeless if her tenancy was terminated.
As a result of the recent trauma and the ongoing intimidation, Anna had been unable to work. Anna was not eligible for Centrelink because of her visa status. She had no family in Australia. She had no savings and was unable to afford basic food and household items.
Anna was referred to RLC by the SWDVCAS service for advice about financial abuse. RLC has assisted Anna in the areas of tenancy, employment and credit, debt and consumer law. As a result, Anna has had nearly $30,000 debt waived, her rental termination has been delayed while she finds an alternative, and we have facilitated referrals to counselling and charity services for crisis support.
*Names changed to protect client’s privacy
