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Am I liable for cards in my name that I didn't use?

By  |  Published: June 12, 2017

Your Business Credit
Your
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question or read her prior answers in the 'Your Business Credit' archive.

Question Dear Your Business Credit,
I was talked into helping two guys with their company via a credit broker who used my info and got six unsecured cards in my name and the business name.

I never signed the broker agreement and was never allowed to read or sign any of the individual credit card applications. I was never a member of their company. The business owners told the brokers they would do all the paperwork instead of me without my knowledge.

Several weeks later I got several credit cards in the mail and stupidly sent them to the business owners, who started charging nonbusiness purchases to the cards and running them up to the max. They used one of the cards to fund a PayPal account not under my name. They also had the monthly statements sent to themselves, so I could not see what was happening. They paid the minimum payments for about eight months until they were maxed and then stopped.

I found out after they were 90 days overdue when the banks called me. I reported this scam to the police and the six credit card companies. One has dismissed all nonbusiness charges, three have gone totally silent since I reported the issue, and two are holding me responsible.

I have not signed any agreements. Chase says I owe them because I forwarded their card to the scammers. Do you think that is legal? They also say any nonbusiness purchases are still my responsibility.

I think I have a good case for embezzlement against the scammers, but would like the credit card companies to absolve me from the charges since they have NO applications from me that are signed or sent from my email. The scammers must have sent in the apps via their email. They live in Pennsylvania. I live in Massachusetts. Thanks for listening. – Brian

Answer Dear Brian,
What a mess – and a cautionary tale for anyone tempted to help someone they don’t know well to obtain credit.

I know you already regret sending the cards to these scammers, so I won’t go into how unwise that was. Your note already tells the cautionary tale.

I ran your note past Jen Lee, an attorney with offices in San Ramon and Tracy, California, who frequently advises clients on debt-related matters and who is a co-author of “Preventing Credit Card Fraud: A Complete Guide for Everyone from Merchants to Consumers.”

Her take was that when you received the cards in the mail and forwarded them, you were “basically accepting the terms of the issued cards,” she said in an email.

By forwarding the cards to your associates without any kind of agreement, you’ve put yourself in a tight spot, she explained. Saying you never applied for the cards yourself is contradicted by receiving the cards and sending them on, she said.

“Normally, someone who receives a credit card that they didn’t apply for would call and cancel the card and make sure that there are no identity theft issues going on,” she wrote. That said, she acknowledged, it sounds like you may have been scammed into the arrangement.

Unfortunately, it’s probably going to be difficult to convince the credit card companies that you weren’t in on this deal or that you didn’t authorize them to use the cards because you actively participated in forwarding them, she said.

You may have a case for pursuing the scammers, however, she added, noting that getting documentation such as a police report may help with disputing the charges. It’s still possible, though, that the credit card companies will not release you from liability and you’ll need to pursue the scammers for indemnification, she said.

While Lee has a very informed opinion, it is only that, and not legal advice, since we only had what was in your note to go on. Your next step should be to explain your situation fully to an attorney in your state with experience in credit-related issues. This is a situation that will be hard to handle without a knowledgeable professional on your side. 

See related: What's a fair card agreement in a business partnership?, Keep your personal credit separate from your job

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Updated: 08-23-2017

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