Proposed Regulations to Mitigate Financial Consequences of Domestic Violence and Elder Abuse
The Consumer Financial Protection Bureau (CFPB) is proposing new regulations aimed at reducing financial coercion in domestic violence and elder abuse cases.
In many instances, abusers use manipulative or coercive tactics to compel their partners or family members to apply for credit cards or loans. Abusers might create unauthorized accounts under the victim’s name without their consent, force them to sign financial documents against their will, or make unauthorized purchases on existing accounts.
The repercussions of financial abuse can be severe for survivors. Approximately three-quarters of domestic violence victims stay in abusive relationships longer due to coerced debt, according to CFPB data. This issue is more pronounced among women of color who are more prone to experiencing financial abuse and bear higher levels of coerced debt.
Enhancing Protections
Financial abuse can significantly harm a victim’s credit score. After removing these debts from their reports, roughly one-third of survivors experience an increase of over 20 points in their scores, which can mean the difference between qualifying for loans or obtaining better interest rates.
“Individuals trapped by domestic abuse frequently sign documents under duress, damaging their financial standing and making it harder to escape,” stated CFPB Director Rohit Chopra. “Expanding identity theft protections could help survivors rebuild their financial lives and ensure our credit reporting systems do not serve as tools for domestic and elder abuse.”
Seeking Public Insight
The CFPB is currently formulating rules to address financial abuse but needs public input on the precise impact of coerced debt on credit scores, along with any obstacles that could hinder victims from obtaining assistance.
The bureau also wants to understand the challenges posed by coerced debt for specific groups, such as children in foster care, survivors of intimate partner violence, and older adults. Elder abuse is particularly difficult to detect because many elderly individuals are more inclined to trust others and less likely to report abuse, making them susceptible to both internal abusers and financial fraudsters.
