Jail or no? Penalties for using partner's credit card


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, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for

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

Question Dear Your Business Credit,
I know someone who used a business partner's card for a period of a year and the charges were $10,000. Will they get a jail sentence? This is a first offense. -- Sarah.

Answer Dear Sarah,
This situation may sound like a potential "Law & Order" episode, but not so fast.

The answer to your question depends on how the free-spending partner got access to the cardholder's credit card information and what actions the cardholder and card issuer have taken in response.

In some businesses, one partner will obtain a credit card and make the other partner an authorized user so they can track business expenses in an organized way. In those cases, the primary cardholder is likely responsible for the charges under the cardholder agreement, unless he has notified the card issuer to remove the partner as an authorized user on the account.

The cardholder is also likely responsible if he shared his card number with a business partner for a single purchase and then the partner "stretched" the privilege to buy other things. Typically, sharing the account information with an unauthorized user would put the cardholder in violation of a credit card agreement. Very likely, that same agreement had a clause saying that if he did share the credit card number, he's liable for the charges made by the person with whom he shared it. For more on this topic, check out "Is sharing your credit card ever OK?"

Now let's consider another possibility. Let's say the partner was not an authorized user of the card. The partner found out the cardholder's account information without the cardholder's knowledge and used the account to go on a shopping spree at the mall, committing identity theft. The cardholder reported the incident to the card issuer as soon as it was discovered and, at the card issuer's prompting, filed a police report. In that case, it is possible that the partner who ran up the charges will face legal action.

Since both state and federal laws apply to identity theft, the consequences would depend on what type of case is brought against the perpetrator and how well the plaintiffs prove their case. At the federal level, the maximum sentence for identity theft is 15 years; there may also be substantial fines. States also have their own laws about identity theft, so the outcome may depend on where the crime took place. The National Conference of State Legislators has summarized the penalties for identity theft in a chart you may find helpful.

Many cases of identity theft by someone known to the victim don't get that far. Often, the victim finds it hard to take action. If these two business partners happened to be brothers, for instance, the cardholder might not want to file a police report against his spendthrift brother. Sometimes, the victim can work out an agreement for restitution with the perpetrator. But often the victim eats the loss -- and is much more careful about guarding credit card information in the future.

See related: Am I liable for business debt my partner hid?, Freezing business card accounts after the company fails

Meet's reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,'s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.

Published: January 12, 2015

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Follow Us

Updated: 10-21-2016

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.