Are authorized users on credit cards liable?

Authorized Credit Card Users: Understanding Liabilities

Credit cards offer convenience and flexibility, but it’s crucial to understand the responsibilities associated with using them. In the case of authorized users, it’s important to clarify who is liable for any financial obligations.

Sole Liability of the Primary Account Holder

When an authorized user is added to a credit card account, it does not diminish the primary account holder’s sole liability. The primary account holder remains fully responsible for all purchases made on the account, regardless of who made them. This means that the primary account holder is legally obligated to repay the outstanding balance, regardless of whether the authorized user contributes to the payments.

No Personal Liability for Authorized Users

Authorized users are granted access to the account and can make purchases using the card, but they incur no personal liability for any outstanding balances. This is because authorized users are not considered joint account holders. Their role is limited to accessing and using the card on behalf of the primary account holder.

Understanding the Agreement

When adding an authorized user to a credit card account, it’s essential to review the terms and conditions carefully. The agreement should clearly outline the responsibilities of both the primary account holder and the authorized user. It’s also important to note that authorized users may be held responsible for fraudulent purchases if the primary account holder reports them.

Protection Against Unauthorized Use

The Fair Credit Billing Act (FCBA) protects consumers from being held liable for unauthorized purchases made on their credit card accounts. If an authorized user makes unauthorized purchases, the primary account holder should report this to the credit card issuer immediately. The issuer will then investigate and may remove the unauthorized charges from the account.

Conclusion

In summary, authorized users on credit cards have no personal liability for outstanding balances. The primary account holder bears the sole responsibility for all purchases made on the account. By understanding these liabilities and adhering to the terms of the credit card agreement, both the primary account holder and authorized users can use the card responsibly and avoid financial pitfalls.