The Consumer Financial Protection Bureau has proposed rules designed to reduce the impact of coerced debt on victims of domestic violence and elder abuse.
In many cases, abusers manipulate or intimidate their spouse or family member into applying for credit cards or loans. Abusers may open accounts in the victim’s names without their knowledge, coerce them into signing financial documents, or make unauthorized purchases on their accounts.
The effects of financial abuse can be significant for survivors. Nearly three-quarters of domestic violence victims report staying in an abusive relationship longer because of coerced debt, according to the CFPB. The impact is even greater for women of color, who are more likely to experience financial abuse and carry higher amounts of coerced debt.
Expanding Protections
Financial abuse can have a dramatic effect on a victim’s credit score. The CFPB noted that once survivors clear these debts from their credit report, roughly a third see their credit score jump by over 20 points. This increase can be the difference in qualifying for a loan or securing a better interest rate.
“People trapped by domestic abuse must often sign documents under the threat of violence, ruining their financial lives and making it even more difficult to escape,” said CFPB Director Rohit Chopra, in a prepared statement. “Expanding identity theft protections could help survivors rebuild their financial lives and would ensure that our credit reporting system is not used as a tool for domestic and elder abuse.”
Searching for Insight
The CFPB is in the initial stages of developing rules to address financial abuse and is looking to the public for insights on the true effects of coerced debt on credit scores, as well as potential barriers that may prevent victims from receiving aid.
The CFPB is also interested in understanding the challenges that coerced debt creates for specific groups, including children in foster care, survivors of intimate partner violence, and older Americans.
Elder abuse, in particular, can be hard to detect because many older individuals are more likely to trust others at their word and less likely to report being victims of abuse. This is why older adults have been under particular duress from both in-house abusers and from criminals who seek to coerce the elderly or prey on their emotions.
