If I'm not liable for my company's credit card debt, why is a collection agency calling me?

Your Business Credit with Elaine Pofeldt

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. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

If I'm not liable for my corporation's card debt, why is a debt collection agency calling me? 

Most companies assume the liability for corporate cards. It would be wise to call the credit card company to find out what the contract says regarding your card. 
Expert Q&A

Check out all the answers from our credit card experts.

Dear Your Business Credit,
Before I left my job in April 2017, I had duly filed my business expenses incurred on my corporate American Express card. My firm, for weird reasons, rejected that expense report and by then, I had moved to a new state and had a new phone number.

I heard from Central Credit Agency in January 2018 that I owe $2,100 ($1,600 in charges and $500 in fines). I called up AmEx and asked them if my credit score was already hit, and they confirmed that they wouldn't do credit reports for delinquent accounts with corporate clients and assured they will not do it.

True to the fact, my mortgage person pulled a hard inquiry to check and my credit score was still intact (seven months after I quit my previous firm). Now, I have refiled the expense report and am reaching out to the highest authorities in my previous firm but that is likely going to take time to resolve.

In the meanwhile, Central Credit agency keeps calling me. I want to know how to deal with them and also understand if this debt collection agency has the ability to hurt my credit score. Much appreciate your advice. – Hema

Dear Hema,
I’m sure it’s very distressing to get calls from a collection agency when you’ve been trying to do the right thing all along. And it’s smart that you’re asking questions. Understanding your rights is important when dealing with debt collectors.

Find out who is responsible

As a first step, I’d find out if you are actually responsible for the debt. Corporate cards may or may not impose individual liability, as we explored in the story “Employees increasingly off the hook for travel card expenses.” About 80 percent of companies carry the liability for employees’ travel cards, as the story reported. To find out for sure, call American Express and ask for a copy of the terms and conditions of the card.

Although you’ve mentioned AmEx has said it will not report the debt, I would not recommend that you simply forget about it until the matter is resolved with your former employer. The situation could change if the unpaid debt drags on.

And regardless of card type, American Express has said that it does report delinquencies to a credit bureau if an individual is liable and the payments have become past due for 180 days, as we reported in “Corporate credit cards: How they work, benefits, drawbacks.

Assert your rights

Given that AmEx told you it won’t report the debt to a credit bureau, a factor that suggests you may not be liable, it’s puzzling why it would send the debt to collections. It would be worth your while to inquire about that. Ask the debt collector for proof of the debt. The Consumer Financial Protection Bureau (CFPB) has published information on how to do that on its website.

If you're not liable for the bill, then you can tell the collection agency it's not yours, and firmly assert your rights under the Debt Collection Practices Act. The CFPB’s site includes a sample letter you can use to do this.


Tip: If you're not liable for the bill, then you can tell the collection agency it's not yours and firmly assert your rights under the Fair Debt Collection Practices Act. 

Your letter is a good reminder for small firms that issue business credit cards to their employees that it is important to respond quickly if an issue comes up with an expense report.

While managers do need to keep a close eye on expenses to make sure employees don’t abuse their cards, businesses need to make sure employees can use the cards in legitimate business situations without fear that they will not be reimbursed and left with a big debt. Trust is essential in business relationships, and it is a two-way street.

See related: Six questions to ask about your company credit card, Am I on the hook for my business's credit card debt?  

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Updated: 12-14-2018