Expert: Christine Janklow - 11/20/2008

Question
I was recently let go from my position as a Regional Sales Manager.  I had been issued an AMEX card by the company to charge business related expenses (Gas, Hotel, Airfare etc.).  I was to submit expense reports and be sent a check to personally pay the AMEX bill. The card had both my name and my employer's on it.  I assumed the company was the account holder and I was a user.  
I only worked for the company for 10 weeks and only received the first AMEX statement a couple of days after my termination. There was a balance on the card at the time of my termination. As I was no longer employed with the company, I did not turn in an expense report for the charges and assumed the company would go ahead and pay the AMEX charges.
I just received an email from the CFO telling me I need to pay over $1200 in charges (all legitimate expenses accrued during my employment) that remained on the card after my termination.  I had not turned in an expense report so I did not receive a check from this company in order to pay the AMEX bill.  
I called AMEX and was told that I am liable because the company provided them with my SS#.  What are my rights in this situation?

Thank you

Answer
Mike: Thank you for your inquiry. The issue of Authorized Users vs. Co-Signers is a ramped one, as is defined as follows - read my advice thereafter:

CO-SIGNED CREDIT CARDS

A co-signer is an individual other than the borrower who signs a promissory note and thereby assumes equal liability for it. With co-signed credit cards, the co-signer guarantees and is responsible for the debt. This means that the co-signing person is responsible for paying the full amount of the debt if the card holder doesn't pay. In fact, when co-signed debt goes into default, three out of four times co-signers are normally asked to repay what is owed, according to the Federal Trade Commission.

Furthermore, the issuing bank can attempt to settle the debt without first trying to collect from the card holder. The bank can also use the same collection methods against the co-signing individual, including suing and garnishing wages. If the debt is not paid, it can leave a negative mark on the credit history of the co-signer, as well as the card holder.
 

AUTHORIZED USER ON A CREDIT CARD

An authorized user is someone authorized by the original credit card holder to use the holders card. The card-holder is responsible for the charges of the authorized user, but the authorized user is not responsible for paying any charges, including his own. An authorized user is different from a co-applicant, who is responsible for paying all charges, including those made by the principal card-holder.

Q. If a bank or other credit grantor agrees that the authorized user is not responsible for repayment of the debt, how did it get on this persons credit history as a delinquency?

A. It got on there because the credit grantor reported it to the credit reporting agency as a delinquency of the authorized user. Why? Unable to collect from the responsible party, the original card-holder, the credit grantor hopes that maybe the authorized user will pay to keep their credit record clean.

Q. That seems like blackmail?

A. It is, sort of, but it is understandable. Credit grantors have been burned many times when authorized users have run up credit card bills and the original card-holder has refused to pay. Despite the fact that they are clearly responsible, card-holders make life difficult for grantors when they say "Hey, I’m not paying, you don't see my signature on all those credit slips, do you?"

Assuming she is confident she signed nothing herself, she should write to each credit grantor and get a copy of the contract that her boyfriend signed. At the same time, she should write to both the credit grantor and the credit reporting agency, as follows:

"I'm an authorized user only and am not financially responsible for this debt. By reporting me delinquent, you are impugning my credit reputation in full violation of the Fair Credit Reporting Act (FCRA). I am aware of my rights under the Act. I intend to enforce them if you don't immediately remove all derogatory information from my credit profile that you placed there as a result of non-payment by the financially responsible party."

“In addition, please provide me with a copy of the agreement you claim I signed and upon which you are reporting delinquencies in my name to the credit bureaus.” - Source : mtgprofessor.com

You need to write both your employer (HR manager and supervisor) and get them to show you a copy of what you agreed to in your employment agreement. Then you need to contact Amex and the credit bureaus to dispute claims (if reporting to your credit) write the creditor a "Verification of Debt" visit www.fair-debt-collections.com
for more on this and other collections and creditor facts. You want to put a dispute on record so that can be contested and you have documentation available to get this straightened out. Don't worry to much about dings on credit, because unless you want to pay out the $1200 blindly, you can get them to remove the reporting if it turns out you don't owe the money. I hope this proves helpful, and if so, please take a moment to provide a positive rating or comment so others may benefit from it as well.

Respectfully,

Christine Janklow