Are You the Victim of “Economic Abuse?”
WBUR, the public radio station in Boston broadcast an interesting conversation about a domestic relations topic I had not heard characterized as such. We have devoted much ink to the topic of domestic violence and its close cousin, child abuse. This is an area where both the crimes codes and divorce law have spoken clearly. You can go to jail for hitting or threatening violence toward any person with whom you have an intimate relationship.
Economic abuse is a more challenging subject because there are some clear legal limits but then the word “abuse” starts to take on its murky character. Whether married or not, if I contact a credit provider and pretend to be my spouse or partner to secure credit or cash, I am committing the same crime as I would if I lifted data from a stranger’s server or desktop (the wooden kind) and used it to apply for credit or withdraw from an account. That’s fraud or theft and both federal and state laws make it a crime.
But, suppose I am mad at my spouse or girlfriend and want to wreak havoc on her but not commit a crime. I could call her credit providers and try to shut down her accounts. If we share joint accounts, I can withdraw all the money or divert my payroll used to share the bills to a new separate account. We live in a day when few of us carry cash. We rely on Visa, Mastercard and our bank’s debit cards to motor through life. Credit providers live in a scary world today and they are skittish. I recall my wife buying a modest piece of jewelry in Scotland some years ago. The jeweler said the Amex transaction was denied. When my spouse got on the phone with Amex their response was: “You were flagged because this was an unusual transaction in a country we did not know you were in. Next time let us know.” Fraud is ubiquitous.
Then there is a whole other creepy side. I represented the wife of a prominent area physician. No slouch herself, she sat on the boards of a couple local cultural institutions. The divorce started out as amicably as such transactions can but then the client told me one day that she could not pay legal fees. I asked why and the response was: “My husband has absolute control of the accounts. I present him every week with what needs to be paid in a written list. He takes it and marks up what he will pay and not. Then he puts enough money in my house account to buy groceries. Your law firm was on the list. He struck through it saying he had paid enough for legal fees.”
This client lived in the “big” house. The one with the Mercedes 500 and the Range Rover. Kids in private school. But my client was getting calls that the Range Rover was on the repo list for late payments. Why? Because Dr. K decided he would punish British Leyland. They charge too much to service the car.
So this stuff happens. Angry couples see jobs lost; money gambled; IRA and 529 accounts drained or 401K accounts accessed by borrowing. As the podcast revealed, people living in the big house with the fancy cars can see the financial net collapse quickly. And in today’s world liquidity is defined by the credit limit on the six plastic cards that live in your wallet. One of the folks interviewed on the radio broadcast told the story of a spouse who emptied the accounts and played child and spouse support games. With three young kids, she had a home in foreclosure and utility shut off notices in her mailbox. She looked for an apartment but the nonpayments had tanked her credit score. Landlords declined to give her a lease.
Is this abuse? If you have ever been at a grocery store with four bags full of food only to have the clerk say: “The transaction is not going through” it sure feels abusive. But, what is the solution? And how is the grocer supposed to address this?
The thrust of the discussion in the radio show was about regulatory reform. Credit is controlled by the Fair Credit Reporting Act. 15 U.S.C. 1681 and some other state and federal regulatory schemes. The guests on the radio suggested that lenders and landlords should not be permitted to discriminate just because your credit history tanked…..if you are an abuse victim. But defining economic “abuse” is tricky and in many instances, couples are in a bad financial place because both of them thought the ship was coming in next week, next month, next year. That’s not to say games can’t be played of the kind described above, but is there a reason the lender or landlord should be summoned to help rescue the person who has been victimized by the one they loved?
The real problem in Pennsylvania is that in a divorce setting, unless someone files for emergency relief, the rule of the jungle can prevail on matters such as support, bill payment, cash and other asset management. And even then, you might go to court to address one issue to come home and find that your ex has launched a new economic missile. What’s needed is a conference shortly after a divorce is filed where each party presents a statement of incomes/assets/debts so that a court can assess what interim protections would mitigate economic abuse and push the case toward an orderly conclusion. There are times when the economic damage has been ongoing and largely irreversible. But courts should try to preserve order and prevent chaos for the sake of the parties and, yes, even their creditors.
The ON POINT radio broadcast of January 27 is found here: On Point