Financial Abuse: How to Identify and Stop It

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Financial abuse is a form of domestic abuse that can result in damage to your finances and credit, restrict your access to money and entrap you in an abusive relationship. Financial or economic abuse can be subtle or severe, and could apply to older adults being abused by caretakers, adult children being manipulated by parents and a variety of other scenarios. Here, we'll focus on its effect on couples who share finances.

What Is Financial Abuse?

Not all money problems are signs of economic abuse. Money disagreements or unequal sharing of responsibility for paying bills, for example, are common. In healthy relationships, issues like these may be resolved by learning more about managing credit, sticking to a budget or handling joint accounts.

Financial troubles can cross the line into abuse when control, deception and exploitation enter the picture. Secret spending, hidden accounts and identity theft are classic signs of financial abuse. According to National Network to End Domestic Violence (NNEDV), financial abuse can take many forms, among them:

  • Withholding money or giving an "allowance."
  • Not allowing access to bank accounts.
  • Forbidding you to work or sabotaging work opportunities by stalking or harassing.
  • Running up large amounts of debt on joint accounts.
  • Forcing you to write bad checks or file fraudulent tax returns.
  • Refusing to work or contribute to family income.
  • Hiding assets.
  • Stealing your identity, property or inheritance.
  • Forcing you to work in a family business without pay.
  • Refusing to pay bills.
  • Evading child support or manipulating a divorce process by hiding or not disclosing assets.

Financial abuse occurs across socioeconomic, educational, racial and ethnic groups and includes people of all genders. Often, it fits into a larger pattern of abuse. In a study cited by the Center for Financial Security, 99% of domestic violence survivors also experienced some form of financial abuse. Financial instability is also a common reason someone may stay in an abusive relationship or return to their abuser.

How Financial Abuse Can Affect Your Credit and Finances

Financial abuse can ruin your credit and finances. If your partner siphons off or totally depletes your savings, runs up charges on your credit cards, takes out loans in your name, fails to make payments on debt, blocks your access to accounts or interferes with your ability to make money, you could be left penniless, in debt, out of work and with poor credit.

Self-assessment is key. Have you been prevented from opening or accessing accounts? Are you cut off from managing day-to-day finances? Do you suspect money is being funneled into a secret account? Financial abuse is different in every case and can sometimes be difficult to recognize. If you feel intimidated, threatened, deceived or bullied—or you feel you can't productively address your concerns with your partner—these are red flags, doubly so if financial issues are part of a larger pattern of verbal, sexual or physical abuse.

If you suspect financial abuse, accessing your credit report can be a helpful first step. You'll see your credit card balances and payment histories, and whether new credit inquiries have been made or new credit taken out in your name. Access your credit report for free at all three credit reporting agencies at AnnualCreditReport.com. Be mindful of your safety: Online activity on your home computer could be trackable by your spouse or partner.

Ending the Abuse Cycle

Breaking a cycle of abuse often means ending the relationship and working to establish financial independence. This can be a complicated and risky process. Help and safe harbor from supportive friends and family can be key to helping you break free. Objective advice from mental health professionals or legal counsel can also be invaluable.

  • If you are in immediate danger at any time, call 911.
  • Trained domestic violence advocates at NNEDV can help you evaluate your situation and devise a safe plan for ending abuse and/or getting out of the relationship. Get more information by visiting the National Domestic Violence Hotline or calling (800) 799-SAFE.
  • The Allstate Foundation recognizes the importance of financial literacy in combating abuse. The Moving Ahead Curriculum developed by NNEDV and the Allstate Foundation provides step-by-step information to help you understand, move through and rebuild after financial abuse, including important tips on staying safe. This interactive curriculum is available online.
  • Womenslaw.org provides legal information related to domestic or sexual violence, regardless of your gender.
  • Domesticshelters.org connects you with domestic violence shelters in communities throughout the country.

The Path to Recovery

Recovering from financial abuse is a long-term process. For couples who stay together, setting boundaries and rebuilding trust are critical steps forward. For those who have suffered substantial damage to their finances and credit, recovery may mean navigating separation and divorce while also working to establish financial stability and repairing credit.

Learning how to respond to identity theft, rebuild credit, get out of debt and make a financial plan are all good places to start. You may also find the following tools helpful for keeping your accounts secure in the wake of financial abuse:

  • Set up fraud alerts and credit freezes at all three credit reporting agencies. A fraud alert asks potential lenders to verify your identity before extending credit; a security freeze prevents new lenders from accessing your credit report unless you lift the freeze, making it more difficult for new credit accounts to be opened in your name without your knowledge.
  • Add two-factor authentication to your online accounts, wherever possible. Two-factor authentication requires a user to input a password or passcode plus a one-time code, sent by email or text, to verify identity. This added security can help prevent other parties from cracking into your accounts, changing your passwords and blocking your access.
  • Sign up for transaction alerts, so your bank notifies you whenever a transaction is made on your account(s). This is not only handy for keeping track of your money; it also alerts you to suspicious activity.

Moving Forward

It'll take time and determination to get yourself out of debt, rebuild your finances and repair your credit. Even if you are able to effectively regroup without ending your relationship, you may be in restoration mode—financially and emotionally—for quite a while. Seek out help and support when you need it. Give yourself time and space. And know that being on the path to recovery means you're moving in the right direction.

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