Can a minor be sued for defaulted card debt?
Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Opening Credits,” a weekly reader Q&A column about issues for people who are new to credit, for CreditCards.com.
Dear Opening Credits,
My minor son, 18, was issued a credit card by Amazon with a $1,200 limit. In Alabama, a person cannot obtain a credit card until they are 19. Of course, he did this without my knowledge. Nor was he able to pay back what he charged.
I attempted to call the collection agency and was told the national law says he can have one at 18, the age of majority. They refused to cite that law, and of course refused to speak with me.
I have read the Credit CARD Act if 2009. Strict approval methods include that the person can apply for a card at 18, and a card can be issued only if the minor proves he can pay the debt back.
My son applied online and was approved within five to 10 minutes. No paycheck as proof was required. What are our options? Thank you in advance for your time. – Holly
Although federal law requires a person to be at least 18 years of age to enter into a credit card contract, individual states can set the bar higher for the necessary age of majority, which is when a minor is considered to be an adult.
For example, an Alabama resident needs to be 19 to get a credit card in their name only. You mention the CARD Act, which does stipulate that anyone under the age of 21 (but older than 18) must report on the credit card application that they make enough money to handle account repayment on their own, but that doesn’t mean the issuer takes pains to verify an income source.
I spoke to Judson Crump, a consumer law attorney based in Mobile, Alabama, about your situation. He confirmed that a credit card agreement signed by an 18-year-old Alabama resident is most likely not binding.
What to do now? If your son can drum up the funds to pay what he owes, he should. After all, he did rack the debt up. Or he can borrow the money from a relative and create a repayment arrangement. It's probably too late to return what he bought since the account has already gone into collections, however, he can sell what he purchased and turn over a lump sum to the collection agency.
He should also stop having verbal conversations with collectors. Under the Fair Debt Collection Practices Act, he has the right to ask them to stop calling and request that the collectors only contact him in writing. However, he must send the request in writing. “Don’t bother talking on the phone,” says Crump. “It rarely results in what you want. Dispute the debt with the collection agency in a letter instead.”
- Have your son get the address for the collection agency, and then type up a letter. It should include his name, contact information and the account number for the debt in question.
- He needs to explain that he was 18 when he applied for the card and, therefore, clearly not old enough to sign for the account.
- Cite the law, “Alabama Code Title 26 - Section 26-1-1 Age of majority designated as 19 years.”
- Then he should be explicit about what he wants: for them to stop pursuing him for this debt.
- Sign and date the letter, and send a copy the Federal Trade Commission at 600 Pennsylvania Avenue, NW Washington, DC 20580.
- Also make copies for his records, then send it from the post office via certified mail, return receipt requested.
After reviewing the facts, there is a good chance the collector will drop the matter. In the event they continue to pursue your son for the debt, your son should contact an attorney. “If it goes that far, most judges would say to the collector, ‘Sorry, you know this is Alabama, and he wasn’t 19,’” says Crump. The odds are your son would not be held liable.
If you son lied about his age on the application, that’s considered fraud, says Crump. “It could matter, but it’s incredibly rare that a creditor would seek damages. I’ve heard creditors talk about it, but in thousands of cases have never seen them do it.”
Finally, I must stress that this problem is not your responsibility to solve. Technically, your son was too young to apply for a credit card when he did, but he’s still an adult. The best thing you can do for him is to encourage good decisions and provide accurate information. Then let him take the reign on fixing this self-imposed mess.
Tip: The Credit Card Act stipulates that a person cannot qualify for a credit card at 18 unless the applicant can prove a steady source of income.
- Q&A: Can I protect my credit score if I can't pay card's full balance? – Until you are able to regain control of your debt, take these steps to protect your credit score ...
- Will it hurt my son's credit if I cancel him as an authorized user? – Once authorized user status is revoked, any credit reporting activity associated with that card disappears. Since children have short histories, they'll take a bigger credit score hit ...
- How are minimum payments determined on a 0 percent balance transfer card? – Just because you are not being charged interest for a specific time period doesn't mean that you won't have to make minimum payments on that balance ...