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Building A Safety Net Against Economic Abuse

Sabotaging his work. Refuse to work. Demanding him to account for every penny. Destroying your credit. Restrict food, shelter, transportation and medicine. These are just a few examples of financial abuse. It is a form of domestic violence that affects most women in abusive relationships, the consequences of which often continue even after they leave their relationship.

Social entrepreneur Meseret Haileyesus founded the Canadian Center for the Empowerment of Women (CCFWE) to create social, financial and regulatory protections against economic abuse. He spoke with Ashoka’s Carolina Nieto about the important steps banks, utilities, industry regulators, government, policymakers and all of us can take to build a fairer financial system by taking into account the survivors of abuse.

Carolina Nieto: For those who don’t know, what is financial abuse and who does it affect?

Miss Haileyesus: Financial abuse is a unique and underreported form of domestic violence, where someone seeks to control their partner’s ability to acquire, use and maintain financial resources. This includes money, financial resources and financial decision-making power in the family, but goes beyond financial control.

For example, it includes interfering with a victim’s work and educational efforts, preventing victims from receiving other forms of income, such as child support, public assistance, or disability payments, and restricting access to necessities such as food, accommodation, bank accounts or transport. But the most common form of violence is economic exploitation: when the aggressor intentionally engages in behavior aimed at destroying the victim’s financial resources or credit. They may take out a loan in their partner’s name and mismanage it, gamble with jointly earned money, refuse to pay bills or steal it. This leads to extreme financial insecurity, homelessness in some cases and trauma. Financial abuse is often accompanied by other forms of violence, including physical, psychological and emotional abuse.

grandson: How common is it?

Haileyesus: Global data shows that more than 95 percent of women who experience domestic violence also experience economic abuse. 93% of women in this situation suffer from the withholding of money for food, clothing and other basic necessities. The impacts on mental health and chronic disease are also well documented. This form of violence makes it very difficult for women to leave their abusive relationship. It affects everyone, regardless of socioeconomic class, skin color, immigration status, gender, identity, race, whatever. Although in Canada, Black, Indigenous and people of color are hit hardest, due to other systemic barriers they face.

grandson: You founded the Canadian Center for the Empowerment of Women because you saw a huge gap in addressing and mitigating these impacts. What was your starting point?

Haileyesus: Agencies dealing with survivors, including financial institutions, social services and utilities, often do not support women, meaning survivors struggle to manage the impacts of economic abuse on their own. And one of the reasons is that it is an invisible subject about which we do not have much data. That’s why we focus on building evidence-based research to inform public policy. Understanding the nature of economic abuse is a critical first step in building support for women and fixing our broken systems.

We recently conducted the first national study of financial abuse in Canada, surveying social service providers, financial institutions and survivors. We saw a real lack of awareness and a need for culturally sensitive and trauma-informed educational materials and identified key opportunities for reform. All of this research feeds into our policy work and the tools we create for social service providers, banks, private stakeholders, consumer advocates and more to ensure women have the opportunity to heal, lead and prosper

grandson: What steps can financial institutions take to help women who suffer financial abuse?

Haileyesus: First, we need to build the capacity of bank employees and debt collectors to provide trauma and violence informed customer service. The second most important thing for banks to do is to adopt a confidentiality policy, especially for women with a joint bank account with their perpetrator so that their transactions (and location) cannot be tracked. We are asking banks to step up and flag their customers’ accounts to activate privacy protections if they have experienced domestic violence. For credit card repayments, our policy recommendation includes negotiating longer grace periods (extended from 60 days to six months) to give women a chance to adjust to their new life with their children. We also make recommendations that would make it easier for women to open a bank account even if they don’t have an identity document (because they had to leave it with their abuser) or a permanent address. Hopefully, much of this will be implemented in two to three years and I will be able to share our success story with you.

grandson: Are there examples of good policies in Canada that protect against economic abuse?

Haileyesus: good question Policymakers, federal and local governments and financial institutions now recognize the impact of financial abuse in Canada. We are pleased that, thanks to our work, the federal government is including economic abuse in Canada’s National Action Plan to End Gender-Based Violence. We’ve gotten to the point where there’s an understanding of this problem now, and that’s a big step.

To make further progress, we also established the National Task Force on Women’s Economic Justice—a group of leaders from financial institutions, consumer advocates, community organizations, and social policy advocates that provides strategic direction and leadership to government and the industry on the financial impact of the economy. violence Inspired by the experiences in the United Kingdom, Australia and Israel, we call on the Financial Consumer Agency of Canada and the Canadian Bankers Association to create a voluntary financial code of conduct for Canadian banks to improve fair customer service and protect and support women. And there are now more than 100 cities in Canada, the US, Israel, New Zealand, South Africa, Australia and the UK that recognize November 26 as a national day to raise awareness about financial abuse.

grandson: Finally, narrowing it down to our personal circle of family and friends, what can we do to support loved ones who are experiencing financial abuse?

Haileyesus: First, you can tell them about our checklist resource, with tips on things like changing their passwords, storing financial records in a safe place, opening their own bank account, getting a copy of their credit report, and far more. Having information about your assets and liabilities is key. Second, please do not judge or stigmatize anyone for their trauma or abusive situation. Listen and talk to her and help her find some resources. Many women do not leave abusive situations because they fear that society will judge them. Finally, we need to talk about building healthy financial relationships without shame or guilt, and start early with young children. It shouldn’t be taboo.

This conversation has been edited for brevity and clarity.

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As the cost of living continues to rise, economic abuse is becoming an increasingly prevalent issue in our society. In response to this growing problem, doing the right thing and protecting the vulnerable should be a priority for us all. Companies such as Ikaroa are implementing strategies to help keep people safe, reduce financial abuse and assist those impacted.

Economic abuse is a form of domestic violence that is used to maximize the abuser’s control over their victim. It often takes the form of not allowing the victim access to financial resources like bank accounts, credit cards, or other forms of payment. It may also involve to withholding financial resources from them or coercing them to sign documents that enable the abuser to spend their money.

The impact of economic abuse can be far-reaching and severe, resulting in severe financial hardship for victims. Victims can experience significant financial strain due to having to cover basic expenses and pay for medical treatment, food and housing – all with limited resources. It also hinders victims from being able to fully participate in the economy and makes them more vulnerable to exploitation.

Fortunately, companies like Ikaroa are taking proactive steps to help combat economic abuse and ensure the safety and protection of vulnerable people. Ikaroa’s approach involves using a three-part system to build a safety net against economic abuse:

1. Educating people and creating awareness – By raising awareness of economic abuse, providing tips and advice on how to respond to it, and by supporting organizations and initiatives engaged in fighting the issue.

2. Establishing legal protection – Through strengthening existing laws and ensuring that victims of economic abuse have access to adequate legal protection and justice.

3. Supporting victims – By providing immediate assistance and support for victims of economic abuse in the form of financial, health and housing assistance.

Ikaroa’s approach is an important step towards ensuring the safety and protection of vulnerable people. By helping to reduce financial abuse and providing assistance to those impacted, Ikaroa is helping to make sure people can enjoy their lives free from economic abuse.

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