Credit Card Liability: Distinguishing Authorized Users from Joint Account Holders

Users of credit cards fall into one of two categories – account holders or authorized users. Account holders apply for and agree to be obligated on the account. The account holder can authorize others, called "authorized users," to use the account.

Account holders are liable for the debt while authorized users generally are not. The account holder must provide consent to add authorized users and joint account holders. Similarly, a consumer must also provide consent to be held liable as a joint account holder. The collector has the burden of proof showing that the consumer provided such consent.[1]

There are situations where card issuers erroneously code authorized users as joint account holders resulting in debt buyers suing non-liable authorized users as if they were joint account holders. Therefore, as a consumer you'd be wise to demand evidence – other than the card issuer's designation – that you requested to be jointly liable as a joint account holder.

When tested on this issue, however, even the originating creditor may lack proof supporting its designation of an individual as an account holder versus an authorized user. For example, in Johnson v. MBNA Am. Bank,[2] the card issuer was unable to pin liability on a wife as a joint account holder because it destroyed the original account agreement pursuant to its document retention policy. The court in Johnson rejected the argument that the mailing of account statements to both husband and wife at the same address supported their joint-account holder status.

Federal law (15 U.S.C. § 1642) permits the issuance of a credit card only in response to a request or application for a card. The issue turns on whether the existing account holder requested that the additional party be added as an account holder or an authorized user.

Any evidence from the real account holder, like the credit card application for example, showing its lack of intent to create an additional account holder will defeat a collector's lack of proof to the contrary. Debt buyers, who often receive only a computer print-out of the basic facts of an account, will find it that much more difficult to prove joint account holder liability.



[1] "In any action by a card issuer to enforce liability for the use of a credit card, the burden of proof is on the card issuer to show the use was authorized." 15 U.S.C. § 1642.

[2] 357 F.3d 426 (4th Cir. 2004).

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