Sunday, March 17, 2013

Financial Industry's Role in Preventing Economic Abuse

Every year, thousands of women are forced to stay in an abusive relationship because they don't have access to money. Economic abuse is usually addressed as a category of overall domestic abuse, and its definition can be confusing since abuse is mentally linked to noticeable bruises on a victim's person. Yet not all victims are necessarily assaulted, but there are ways to target and help them.

Domestic violence specialists identify three ways economic abuse is used to control and manipulate a victim:

1- denying the victim access to household money or bank accounts.
2- controlling how money is spent and limiting the victim to an allowance.
3- placing all debt items under the victim's name.

But there are times when the victim does have access to bank accounts but is somehow bullied from obtaining the funds. Abusers may threaten to withdraw the money from the accounts, vow to physically assault the victim, or resort to verbal insults to intimidate the victim from touching the money.

In these types of circumstances, the abused will refrain from using the accounts to avoid an altercation or physical abuse. But the slightest suspicion the victim may be prepared to escape can provoke the abuser into emptying the bank accounts.

Regulations controlling bank policies are established on a state-to-state basis. While some states  use controls to prevent one partner from withdrawing large deposits without the joint holder's consent, other states allow both holders full access to the accounts. In the latter scenario, either joint account holder can withdraw all the money without ever notifying the other party. Bank employees are not even obligated to notify either party if foul play is suspected.

Commercial joint accounts are more restricted. Partners are prevented from withdrawing funds without the other party's consent. There is usually dual authority placed to keep tabs on account activities.

Naturally, we expect there to be mutual trust between a married couple. We would assume that if a joint account is open, the couple must be equally sharing access to the account. This is not always the case. But determining how a joint account is being used or whether one party is being abused financially is difficult.

In Oklahoma, police officers are expected to ask a series of questions known as the Lethality Assessment when domestic violence is suspected. If abuse is detected, the police notify the individuals of their suspicion and lists the protective services available. At this point, the individuals can decide for themselves whether they want the help.

Women can be protected against economic abuse if such safeguards were placed on personal joint accounts. Bank tellers can be trained to detect questionable behavior based on account activity. Specific questions can be asked to determine whether a partner is about to manipulate the funds without the joint holder's knowledge or consent. It will help save thousands of abused victims from imminent poverty, in a worse case scenario, or at the very least from having to endure a financial crisis.

We can argue that these measures will come at the expense of an already suffering financial industry. The cost of training bank personnel to detect abuse may require specialized training the sector can't afford right now. But when women lose their money, they have two alternatives: public assistance or debt that can lead to potential bankruptcy. Now, that's a cost the financial sector and the economy can't afford.

Protecting victims from potential abuse actually protects the economy. When individuals are financially secure, it unburdens the government from having to support them. It also shields creditors from writing off millions of dollars of uncollected debt. Victims are able to provide for themselves and their children, afford health care, and support the family in the short-term. Job searching would come at their expense and not the government's time or money. Protections against economic abuse would empower women to begin a new life without the added stress of worrying about money issues.

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