Is it OK for merchants to accept credit cards from minors?
Your Business Credit
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
Dear Your Business Credit,
Can I accept
a credit card payment from a minor at a medical facility if it's offered? -- Mitchell
I'm going to
assume that you work in a medical practice, and the reason you are asking this
is to avoid accepting payments that are invalid.
If you have obtained
the parental consent that's necessary under laws in your state to treat the
minor, or the minor is an emancipated youth, accepting a credit card the young
person is legally authorized to use isn't likely to present a problem, according
to Robert F. Brennan, an attorney in La Crescenta, Calif., who specializes in
wrongful credit damage cases, as well as identity theft cases.
If a minor
incurs a medical charge and later does not pay the credit card bill, then
collecting it becomes the credit card issuer's problem, he notes. "The doctor
already has his money," he explains.
a minor can't cover the debt, it is likely to become a parent's problem. Under
the Credit Card Accountability Responsibility and Disclosure Act of 2009, credit
card issuers are not allowed to issue credit cards to young people under age 21
unless a parent is a co-signer -- meaning the parent has assumed responsibility
for the debt -- or youthful applicants can show independent proof they have the
income to pay the bill. What's more likely is that a young person who proffers a credit card is an authorized user, legally able to use the card, but not liable for the debt. Authorized users may have cards issued in their own names.
"It is extremely unlikely and rare that a
minor would have a credit card without a guarantor or co-signer on the account,
which would be the case if they are an authorized user on their parent's
account," says Leslie Tayne, an attorney based in Melville, N.Y., who advises
small businesses on credit and debt. "If there is a guarantor on the account,
then the debt is collectable."
To be on the
safe side, I'd steer clear of accepting any cards for which a patient may be an
unauthorized user -- such as a card issued to another family member. While a
teen who hands you a parent's credit card likely may have the OK to use it, you
can't know that for sure unless the parent has told you so, either by phone or
speaking, medical providers protect themselves from nonpayments if they treat
a minor by having a separate contract with the parents, according to Michael
Jeffrey Gunderson, a bankruptcy attorney at Gunderson & Tharp, LLC in
Chicago. "Most providers know they can't hold a minor liable, so they get the
parents on the hook," he says.
If you don't have an agreement like this for
parents to sign, now is a good time to have your attorney draft one.
See related: Choosing a credit card processor for a medical practice, Can a doctor's office charge a credit card surcharge?
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.
Published: March 31, 2014