Expert: Christine Janklow - 5/2/2007

Question
Hi there, former Ventura resident here. I am a New York business owner suffering through the mortgage crisis. When I opened my AmEx business account, which was in good standing until January of this year, I had opted to add 'authorized users' to my account---names only given (no socials, no addresses or phone numbers of users, etc. JUST THEIR NAMES FOR THE CARD). After each person left the company, they were removed from the card as to not incur annual fees for each cardholder. HOWEVER, my old employee called me this morning FRANTIC saying that a collector called HER asking for ME and then advising her since she was an authorized user they would expect her to pay the bill(again, except for her name her personal information WAS NEVER GIVEN TO AMEX as its not required). This is a mother of three, stay at home career mom who totally freaked out, as did I. When I called the collector to ask how he got the info (and I can't believe him as I know they lie) he said AmEx gave it to him with the account. I do not know if I filled out a personal guarantee on this card (thought I used my TIN for the business) but if so, even if they don't have her information (except for her phone number) can they hold any of the former employees or former card holders responsible for this debt of mine? Until I resolve this, they said they will be calling all parties associated to this card. Sadly, I was in and out of the hospital and doctors offices most of the early quarter and wasn't in a healthy place to work this out with Am Ex before it went to collections. I sure wish I had because this is just horrible. Please advise. Thanks so much.

Answer
Barbara:
Thank you for your question and concern for others apparently involved in your situation. Please allow me to share some defined information on this subject.
Basically, 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.

If a bank or other credit grantor agrees that the authorized user is not responsible for repayment of the debt, can this report on this persons credit history as a delinquency?

It can if the credit grantor will contact the authorized user and possibly report 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.

Seems like blackmail? 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 neglected to pay.
Hope this helps. As for your debt resolution feel free to contact me. Additionally, if this answer was helpful, please take a moment to rate it, so others may also find the resources they need.

Respectfully,
Christine Janklow