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Unscrupulous lenders bend collections rules

How to defend yourself against collectors when the debt isn't yours

By

To Her Credit
To Her Credit, Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also writes regularly for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.
Ask Sally a question, or read her previous answers in the To Her Credit archive
Question for the CreditCards.com expert

Dear To Her Credit,
An ex-roommate opened a credit card account in her name and put my name as an additional user on the account without my knowledge or consent. She did not sign my name or give any other information like my Social Security number. She ran up over $1,000 in charges on the account and defaulted. I did not even know the account existed until collection efforts began. The bank is trying to get me to pay the bill -- even though the collections agency acknowledged that I'm not listed as a jointly responsible party or primary debtor on the account. My Social Security number is not associated with the account -- which TransUnion has confirmed.

I filed a police report and submitted it to both the bank and the collection agency. Is there anything else I should do? TransUnion deleted the delinquent account from my credit report in February 2008. Could it "re-appear" on my credit report? Any help you can provide will be most appreciated. -- Karon

Answer for the CreditCards.com expert

Dear Karon,
This happens more often than you would think. It's so easy to add someone to a card as an authorized user -- you don't need their signature, financial information, or knowledge. If you can spell someone's name, you can add them to your card.

You have no financial responsibility for this account, and the bank knows it. That doesn't stop unscrupulous companies from trying to collect, however.

You are experiencing debt collection violations. According to Georg Finder, Independent Credit Evaluator, the bank is violating the Fair Debt Collection Practices Act, a federal law since 1977. The bank knows you are not responsible for the bill. Because the collections agency and TransUnion agree you are not responsible for this debt, Finder says, "The lack of responsibility has been acknowledged by more than one entity, so that one collector pursuing it is in violation of the law."

You're on the right track for fixing this problem. Filing a police report was the right thing to do. Adding you as a user is not a crime, but identity theft is. You don't know what else she has done with your name and information, so having a report on record is a good precaution.

Notifying the credit bureaus was also smart. You need to do a few more things to protect yourself:

  • Check your credit report and the interest rates on any other credit cards you own. "If they put it in her credit report and she has other credit cards, they will see that and her interest rates will rise," says Finder. Your ex-roommate's shenanigans can make the interest rates on all your cards go up!
  • If your credit is affected, get legal help. Finder says you should be able to get a lawyer who will take your case "on spec," meaning you don't have to pay an upfront fee. You may be entitled to $1,000 in statutory damages per federal law, plus you are entitled to additional damages if this has affected your credit. (You can find a lawyer through your county bar association.)
  • Make the bank stop harassing you. The creditor may have given up collecting from your ex-roommate, but he's looking for anyone with a deep pocket -- whether he violates the law or not. "Overwhelmingly, they know the law, but they're ignoring it," says Finder. To stop the harassment, you can't just meekly say, "Go away." Send a letter to the collector or account holder saying why this is a harassing and improper activity, and state that if they continue to report this to the credit bureaus, you will protect your legal rights. Specifically tell them to "cease and desist."
  • Rarely, a company will keep trying to collect even after being told to stop. If they call you again, keep a diary of calls made to establish a willful pattern of violation. If they put your information in a credit report, save a record. Victims of this kind of harassment are entitled to up to $1,000 per violation. Finder says, "It gets even more exciting if there is provable credit damage." Finder tells about an extreme case that went to a jury trial in Los Angeles, where the plaintiff was awarded $290,000 for what he went through.

There's no reason for you to be harassed for someone else's bills. Stand up for yourself, and get help if you need it! Good luck!

See related: Debt collection sample letters, 11 tips for dealing with debt collection, collectors

Meet CreditCards.com's reader Q&A experts
Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.
Gary Foreman, New Frugal You columnist Gary Foreman,
"New Frugal You"
Sally Herigstad, To Her Credit columnist Sally Herigstad,
"To Her Credit"
Cathleen McCarthy, Cashing In columnist Cathleen McCarthy,
"Cashing In"
Jane McNamara, Let's Talk Credit columnist Jane McNamara,
"Let's Talk Credit"
Elaine Pofeldt, Your Business Credit columnist Elaine Pofeldt,
"Your Business Credit"
Erica Sandberg, Opening Credits columnist Erica Sandberg,
"Opening Credits"

Published: August 1, 2008



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