Is an authorized user responsible for payments?

Authorized User vs. Co-Signer: Understanding Your Credit Card Responsibilities

Being added as an authorized user to someone else’s credit card can seem like a perk. You get the convenience of using the card and potentially build your own credit history without the responsibility of opening your own account. However, it’s crucial to understand the distinction between being an authorized user and a co-signer, especially when it comes to financial responsibility.

Generally speaking, an authorized user is NOT responsible for paying the debt incurred on the credit card. You are simply permitted to use the card with the cardholder’s permission. The primary cardholder remains solely responsible for all payments and managing the account.

Think of it this way: the cardholder is essentially giving you permission to use their money (or, more accurately, their credit line). You benefit from the convenience, and potentially from building your credit score if the card issuer reports authorized user activity to credit bureaus. But the buck stops with the primary cardholder when it comes to settling the bill.

However, things can get tricky if a debt collector claims you are responsible for the debt. This is especially concerning if you believe you were only an authorized user. This situation can arise due to confusion on the part of the debt collector, a misunderstanding of the terms of the agreement, or even, in rare cases, a deliberate attempt to collect from someone who isn’t liable.

What to Do if a Debt Collector Contacts You:

If a debt collector contacts you claiming you co-signed a credit card debt, despite you believing you were only an authorized user, DO NOT panic. And DO NOT admit to owing the debt.

Instead, take these crucial steps:

1. Demand Proof: Your first and most important action is to demand proof that you co-signed the debt. You have the legal right to request verification of the debt. This should include documentation that specifically demonstrates your legal obligation to repay.
2. Request a Copy of the Agreement: Ask for a copy of the original credit card agreement. This document should clearly state who is responsible for the debt. Look for your signature and the language defining your role. If you are simply listed as an “authorized user,” you should not be responsible for repayment.
3. Check Your Credit Report: Review your credit report from all three major credit bureaus (Equifax, Experian, and TransUnion). See if the account is listed as a “joint” account or if it accurately reflects your status as an authorized user. Discrepancies here can further support your claim that you are not responsible for the debt.
4. Document Everything: Keep meticulous records of all communication with the debt collector, including dates, times, names of representatives, and summaries of conversations. Save copies of all documents you send and receive.
5. Know Your Rights: Familiarize yourself with the Fair Debt Collection Practices Act (FDCPA). This federal law protects you from abusive, unfair, and deceptive debt collection practices.

Important Considerations:

• Co-Signing vs. Authorized User: It’s crucial to understand the difference. A co-signer is equally responsible for the debt. If the primary cardholder defaults, the creditor can pursue the co-signer for the full amount owed. Being an authorized user, on the other hand, does not create this legal obligation.
• Closing the Account: While you are not responsible for the debt, closing the authorized user account can prevent further charges and potential issues down the road. Contact the card issuer directly to remove yourself as an authorized user.
• Legal Advice: If you are unsure about your rights or if the debt collector continues to pursue you despite your valid claims, consider seeking legal advice from an attorney specializing in debt collection or consumer protection.

Ultimately, being an authorized user should provide convenience without the burden of debt repayment. By understanding your rights and taking the necessary steps to protect yourself, you can avoid being wrongly held responsible for someone else’s financial obligations. Remember to be proactive and assertive in demanding proof of your responsibility before taking any action that could imply you owe the debt.