Authorized Users Are Not on the Hook for Unpaid Credit Card Debt

Authorized Users Are Not on the Hook for Unpaid Credit Card Debt
BY Peter Warden
Jun 19, 2024
Key Takeaways:
  • Authorized users are not legally liable for unpaid credit card debt, including their own charges.
  • Debt collectors sometimes mistakenly harass authorized users, but the authorized user has the right to stop the harassment.
  • The authorized user’s credit standing can benefit from responsible use of the account (such as a low balance and on-time payments).

Say you’re an authorized user on a credit card. One day, the cardholder who added you to the account as an authorized user stops paying or dies. Are you on the hook for the unpaid credit card debt on that account?

Luckily, the law is very clear here. You are not liable for the cardholder’s balance. And that includes any items you yourself charged to the account.

But that may not stop collection agencies harassing you for the money. 

What is an authorized user?

Authorized-user status can be very convenient. Most credit card issuers allow the account owner to ask for another card in someone else’s name on the same account. That added person would be an authorized user. 

The authorized user could make purchases with the card, up to the card’s credit limit. But they don’t become a joint owner of the account and they aren’t responsible for paying back the debt.

The vast majority of credit cards are reported to the credit bureaus. Handling the account responsibly (keeping the balance relatively low and making all payments on time) could help the account owner build positive credit history and a good credit score. Many credit cards also report this data to the authoirzed user’s credit profile, so they’ll benefit if the account owner handles the account responsibly. The converse is also true. If payments are late or the balance is high, that could hurt both people’s credit standing..

Who is liable for unpaid credit card debt?

Only two types of people are on the hook for outstanding balances on a credit card or store card:

  1. The principal cardholder. In other words, the person who opened and owns the account.

  2. Anyone who cosigned the account application. A cosigner is someone who provides their identity and financial information to the lender as a way to help the primary applicant qualify. The cosigner doesn’t get the privilege of using the account, but becomes financially responsible for it if the primary account owner fails to repay the debt.

Debt collectors can make mistakes 

It’s possible for authorized users to be hounded for an unpaid debt. Sometimes debt collectors make mistakes. They may have received little paperwork about an account they’re trying to collect on. They may assume that a stray name associated with an account is a cosigner rather than an authorized user.

Other times, the collection agency knows very well that you have no legal liability for the debt. But that doesn’t stop it from trying to gaslight you into paying. 

Debt collectors can take shortcuts

By law, it is the duty of the collector to prove that you owe a debt. But some agencies skip right to collecting on a debt without doing their homework. 

However, there may be a way to prove you are an authorized user and not a cosigner. Credit card companies typically report authorized users’ status to credit bureaus. 

Get a copy of your credit report. You may find you’re listed on the report only as an authorized user for that account. 

You’re legally entitled to a free copy of your credit report every week. Get yours from AnnualCreditReport.com, the only website authorized to provide the free credit reports you are entitled to by law. 

How to stop collector harassment

Not all agencies are honorable. Sometimes the calls, texts, emails, and letters don’t stop.

Everyone who’s being harassed by collectors is protected under the Fair Debt Collection Practices Act (FDCPA). You can write a letter to your collector instructing it to stop all contact with you. Be sure to cite the act, keep a copy of your letter, and mail it with proof of delivery requested. 

Anyone can write this letter, even if they really do owe the money. Collectors must then halt all communications. 

Whether you owe the money or not, some collectors might ignore your letter. Keep a record of all subsequent calls. It’s a good idea to start a file with copies of all electronic and regular written communications. Screen grabs can help you build an electronic dossier.

Then you can report the collection agency to the Federal Trade Commission and your state’s consumer agency. You might even be able to sue them for money.