Credit Card FAQ

Can an Authorized User be Sued for Charges on a Credit Card?

13 April 2011 by CreditCardsCo™

If a card holder has a second card issued for an authorized user, and defaults on the credit card payments, can the authorized user be sued for any subsequent charges or fees? Does the responsibility for any credit card payments lie solely on the card holders' shoulders or does the authorized user have to take responsibility also? Does a default on a credit card adversely affect the authorized users' credit score, or will the score remain unchanged?

What is an Authorized User?

A credit card holder might give permission for another person to use his credit card account by having a second credit card issued to that person. That person then becomes an authorized user and can use the credit card in exactly the same way as the named card holder. While an authorized user is typically added to an account at the time of application, it can also be added at a later date.

Business owners frequently add a trusted employee as an authorized user in order for that person to make purchases on behalf of the company. This can prove useful to the business and the owner as it means less time is taken up with having to make business purchases personally.

Can an Authorized User be Sued?

The short answer is not usually. Each bank and credit card issuer will have different terms and conditions, but they generally state that the card holder is responsible for all payments and debt incurred on the card. As such it is not the authorized users legal obligation to ensure that payments have been met, although some would say there is a moral obligation.

However, there is typically a clause that quotes "additional card member responsibility," and this will usually put financial responsibility on the authorized user for any charges or purchases made that user in the eventuality of the named card holder failing to pay the debt. Therefore if the debt was for a sum of $2,000 and the authorized user incurred $500 of that total, they could be sued for that $500. It would have to be able to be proved though that the authorized user did indeed make those charges.

Even though an authorized user cannot be sued however, there is the possibility of a civil suit being taken against them if it is thought that they were the one responsible for the balance on the account. The named card holder also has the option of bringing a civil lawsuit against the authorized card holder if he wishes to attempt to get a judgment made for the unpaid amount.

Risks of Having an Authorized User

There are pros and cons associated with having an authorized user on a credit card. While the named card holder is primarily responsible for any debt incurred on the card by him or the authorized user, there is always the risk that the secondary user will not make good on any payments owing which he has agreed to pay.

A risk for the authorized user is that while he will not benefit from any gain in credit score, he could actually have adverse credit listed against him in the event of the card holder misusing the card and not making timely payments.

If there is a need for a secondary person named on the card, it might be more beneficial to have him added as a co-applicant, as both parties will be equally responsible for any debt and charges accrued on the account. Should a card holder default on payments, the co-applicant will be held just as liable for the debt, and vice versa.

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