Sexually transmitted debt: How financial services are fighting financial abuse
By Millie Muroi
There’s been a change in the types of matters coming through the doors of Redfern Legal Centre’s financial abuse service.
Senior solicitor Jasmine Opdam says financial hardship pressures have increased demand for family and domestic violence services. But perpetrators are adopting new methods such as coercing victims to become company directors.
The banking system is being used to perpetrate financial abuse via threatening messages attached to tiny payments.Credit: Monique Westermann
“Often, they don’t even realise until debt collectors are breathing down their necks,” she says, noting victims can be threatened physically, barred from seeing documents or manipulated verbally.
“Perpetrators might tell victims they can’t leave a relationship because they’re tied up in a business together, or that the family won’t have money to put food on the table for their kids unless they sign a business document.”
Perpetrators can also take control of a company themselves, selling off parts of a business or restricting victims’ ability to earn income.
It’s a widespread issue, but one that disproportionately affects women and First Nations people. One out of every six women has experienced economic abuse of some form according to a government survey last year.
“Because so much of managing our finances are online, financial abuse can happen without physical abuse, and continue after separation.”
Rebecca Glenn, chief executive of the Centre for Women’s Economic Safety
Often lacking access to or control of their finances, victims are left to choose between violence and poverty.
Commonwealth Bank’s head of customer vulnerability Caroline Wall says roughly 90 per cent of people who seek support for family and domestic violence also report elements of financial abuse and coercive control. “Financial abuse is a high indicator that there are other sorts of behaviours going on in that relationship that relate to family and domestic violence,” she says.
What else can financial abuse look like?
Centre for Women’s Economic Safety chief executive Rebecca Glenn says financial abuse often escalates after partners separate. “Because so much of managing our finances are online, financial abuse can happen without physical abuse, and continue after separation,” she says.
Since victims can be left in the dark about their financial situation during a relationship, Glenn says perpetrators can rack up debt and wreak havoc on their credit scores.
“What we see is a lot of debt caused by abusive partners,” she says: a form of financial abuse known as “sexually transmitted debt”. “Victims may have loans put in their name by perpetrators, credit cards opened in their name or loans taken out on credit cards they didn’t know about.”
Financial Rights Legal Centre senior solicitor Erin Mulally says people can be pressured into providing assets as security for a loan. “A person who doesn’t have the means to get a loan might ask their partner to put up their car for example” she says. “Then, when the relationship ends, the victim is the one being chased for the debt.”
Jasmine Opdam, Redfern Legal Centre’s financial abuse team senior solicitor.
Glenn says issues are most common with joint products, with perpetrators able to clear out joint bank accounts without consent. “It’s legal but abusive and problematic for victim survivors,” she says.
Catherine Fitzpatrick is founder and director of Flequity Ventures – a social enterprise aimed at disrupting financial abuse through product and service design – and a former bank executive. She says perpetrators can cancel a joint insurance policy without knowledge or consent of the co-insured.
“One woman was told her insurance policy had been cancelled four months earlier, but that the premium refund was paid out only to her partner,” Fitzpatrick said. “She only discovered she wasn’t covered when her partner threatened to burn down house with her and her children in it.”
Perpetrators can also damage a victim’s property, which often cannot be claimed on an insurance policy if the perpetrator is a joint holder. However, Fitzpatrick notes two insurers – Suncorp and Allianz – have added a clause allowing them to assess a claim under special circumstances.
Mulally says utilities companies and telecommunications firms can also be roped in. “Electricity or phone bills can be put in a victim’s name, even though the service is being used by someone else,” she says.
Financial abuse can have a lasting, snowballing effect, including tarnishing credit scores and victims’ ability to access centrelink payments, Opdam says.
“Many leave a relationship and try to go to Centrelink to keep their heads afloat, only to find out they’re not eligible because they’re a director of a company they don’t know about.”
How are companies tackling the issue?
Australian Banking Association chief executive Anna Bligh says people facing financial abuse shouldn’t feel alone, and that banks can help open up new accounts, resolve issues around joint accounts and provide advice on financial hardship and referrals to support services.
“Banking staff are in a unique position where they can often see financial abuse playing out,” she says. “They’re trained to spot red flags and banks have specialist support teams who regularly respond to abuse.”
Australian Banking Association chief executive Anna Bligh says banking staff can often see financial abuse playing out.Credit: Alex Ellinghausen
Wall from CBA says the bank has about 20,000 interactions a year with victims. One of the most common types of abuse is customers sending threatening and harassing messages through the description field of one or two cent transactions.
“While we identify about 2500 high-risk cases every year, we’re blocking over a million transactions from being sent that include words or phrases which are inappropriate,” she says.
Wall says those transactions are a means of bypassing orders that prohibit contact. The bank has built an artificial intelligence model in response to scan transactions, weighing up factors such as the value of a transaction, the language used and the relationship between sender and receiver.
“That allows us to reach out to people experiencing this form of abuse to ensure they’re safe, and ask if they’re comfortable with us taking action against the perpetrator,” Wall says.
The bank can then restrict abusive users or, in serious cases, de-bank that customer for breaching the bank’s terms and conditions.
Westpac’s head of customer excellence Tiffiny Lewin also says it is a problem she encounters. The bank will usually send a warning to the perpetrator or a letter telling them they were not using the service in line with its terms and conditions.
“In greater than 90 per cent of these cases, those customers cease their behaviour,” she says. “So that intervention, and bringing to a customer’s attention that we’re monitoring that behaviour is a really effective way of stopping it.”
Westpac head of customer excellence Tiffiny Lewin says the bank sends warnings to perpetrators
Lewin says Westpac has made it easier for clients to cancel direct debits themselves, rather than needing to go to each service provider. This helps in situations where a perpetrator may use a victim’s card to pay for an ongoing service, but the service provider refuses to cancel the recurring transaction because it is under a different person’s name.
What more needs to be done?
In April, there was an inquiry launched by the Parliamentary Joint Committee on Corporations and Financial Services into financial abuse. Submissions are due by June 14.
Fitzpatrick, who will be making a submission, says government should compel financial services to understand how their products are being weaponised, and change the design of those products and services. “No financial service wants to be safe haven for abusers,” she says.
While there are industry codes of practice, Mulally says guidelines can be non-binding or vague. “We need more specific laws to improve financial providers,” she says.
As more services have moved online, Mulally also says it has reduced friction in some processes and increasing risk for victims. “When people go into a branch for a loan, staff can more easily pick up if one party is doing all the talking or doesn’t seem to understand what’s going on,” she says. “A few extra steps may help financial abuse victims.”
While some companies, including Westpac, have started training design staff to think about how to introduce friction, or empower customers to prevent harm, Glenn says she wants financial safety to be considered when designing all products.
She also says lenders should extend the support they provide to victims of financial abuse. “I’ve seen too many women unable to refinance and desperately trying to repay their mortgage,” she says.
“They often end up paying more on the rental market, and just need a bridge on their mortgage for some period of time. We need regulators, banks and government at the table, thinking about how we can provide that bridge of support for a bit longer.”
While Opdam says banks have done well to upskill their staff, she says many smaller lenders could exercise more scrutiny to identify financial abuse. “They need to take a closer look at joint loans when only one person is benefitting, or where one person is doing all the negotiating,” she says.
Fitzpatrick says any organisation offering joint accounts needs to make it easier to separate those accounts. “They need to understand abuse can start or worsen at separation,” she says.
For people seeking more immediate help, Mulally says there are free financial counsellors and a national debt line which can help assess individual circumstances, and Glenn suggests taking a look at the Centre for Women’s Economic Safety’s steps to financial safety.
‘The tip of the iceberg’
With perpetrators continually jumping to newer products such as buy now, pay later, Mulally says businesses and regulations need to constantly be evolving and considering the threat.
And while the first priority is often understandably physical safety, Glenn says financial safety should not be forgotten. “Financial safety affords options which can improve physical safety,” she says.
Opdam said while people are becoming more aware of financial abuse, there are far more cases than anyone probably realises. “It’s only the tip of the iceberg,” she says.
If you or anyone you know needs support, you can contact the National Sexual Assault, Domestic and Family Violence Counselling Service on 1800RESPECT (1800 737 732).
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