Usually it's harmless, but there may be costly consequences
By Dawn Papandrea
Have you ever lent your credit card to a relative or friend to make a purchase, or bought something using someone else's card?
Perhaps you've punched in someone else's card number on his or her behalf to facilitate an online order. Maybe you've signed your spouse's name on a credit receipt. Doing any of these things is in violation of the credit card agreement, which states that only the person whose name appears on a card can use that account.
Most times, these are harmless actions, but as some experts and card users will tell you, sometimes there are consequences.
"In general, I'm no more likely to loan someone my card than I am my car. Either way, you're accepting liability for someone else's actions," says Liz Weston, a columnist for MSN Money and personal finance author.
It's friendly, not fraudulent
Issuers ban the practice of letting another person use your card, but if you did so willingly, you are breaking your contract, not a criminal law. If someone uses your card without your permission, that's different: That's fraud. Provided you report the unauthorized use to your card issuer and the authorities, you are not held liable for fraudulent charges.
Even if the use is friendly, not fraudulent, bad things can happen. Chief among them: Charges that result from you voluntarily lending out your card are your responsibility.
To protect yourself when others use your card, don't think so much about the legalities, says Robert Lawless, professor of law at the University of Illinois at Urbana-Champaign, who specializes in bankruptcy, consumer credit and business law. "Instead, protect yourself by preventing problems before it ever gets to that point of worrying about legalities by using good judgment," he says.
For instance, using your elderly parent's card to buy groceries is breaking the card agreement, but it's likely that no one is going to question that type of transaction provided the bill is paid, says Lawless. "As a practical matter there are going to be circumstances that arise when people don't follow the contracts, and there are really no consequences to them."
However, for every innocent incident of credit card borrowing or lending, there are potential problems that can result. Here are a few to keep in mind:
A one-time privilege
gets stretched. If you authorize someone to act on your behalf, you can't then go to the credit card company and say you refuse to pay for what was charged, says Lawless. In other words, you will be on the hook for any charges racked up by the person using your account. A sample Capital One credit card agreement, under the section, "Your Promise to Pay" plainly states: " If you let someone else use your Card, you are responsible for all transactions that person makes."
"I've had adult clients who gave their teens a card to go get gas, and then found out they went out to dinner, to the movies, etc.," says Terrence Shulman, founder/director of The Shulman Center for Compulsive Theft, Spending & Hoarding in Franklin, Mich. In some of the more serious offenses, people end up having to file a police report on a loved one to try to recoup some of the charges, he adds.
The person borrowing the card is careless and identity theft results. Whether they foolishly leave the account number sitting on their desk at work, or use the card to make an online purchase on an unsecured site, your account could potentially be at risk when it's out of your control. "Even if I trust the person, giving them my card makes me more vulnerable to fraud committed while the card is out of my possession," says Weston. "When there's a fraudulent charge, the issuers always ask about that, and I wouldn't want to give them any grounds to decide I have to eat the bogus charge."
Embarrassing moments. You're about to make a purchase using someone else's card, and the clerk asks for your photo ID, which of course, should not match. What to do? You'll most likely have to walk away or you can try to plead your case. Aly Walansky, a Brooklyn, N.Y.-based beauty and style blogger, recalls what her mom used to do when they were out shopping together. "When I was a kid, my mom would always use my dad's card. His name is Martin, so they always gave her a hard time. She'd be like, 'It's pronounced Mar-teen. We're French.' We're not," she says.
When I was a kid, my mom would always use my dad's card. His name is Martin, so they always gave her a hard time. She'd be like, 'It's pronounced Mar-teen. We're French.' We're not.