When a business closes or struggles to pay its bills, Virginia business owners and employees who were authorized users of the company credit cards could find themselves in financial trouble. Sometimes, credit card companies try to make any authorized users responsible by placing derogatory information on their credit reports, adding confusion and frustration to an already challenging situation. Understanding your rights and the steps you can take can help you resolve these inappropriate billing situations.
The problem: Unauthorized charges on the owner’s personal accounts
When a company credit card is issued, the expectation is clear: the business is responsible for its expenses. If a credit card company has a personal guarantee from the owner, they can still hold the owner liable, even if the business closes. However, in situations where there is no personal guarantee, oftentimes, credit card companies may still try to place the charges on the owner’s credit card. In addition, they sometimes place derogatory information on the business owner’s credit profile.
The problem: Derogatory credit information on employee accounts who were authorized users
It is not uncommon for a business to have several authorized users who are allowed to use the company credit cards. When a business goes under, sometimes, credit card companies try to hold the authorized users responsible for the company’s unpaid debt. It is not uncommon for a credit card company to place derogatory information on an employee’s credit report, simply because they were an authorized user of the credit card. However, an authorized user is not responsible for payment of the business debt, unless they agreed, in writing, to be responsible.
Applicable consumer protection laws
It’s important to recognize that such practices violate several consumer protection laws designed to safeguard your rights. These laws ensure that individuals are not held liable for debts that rightfully belong to a business. Key protections include:
- Fair Credit Reporting Act (FCRA): The FCRA protects consumers from companies inaccurately reporting derogatory credit information on an individual’s credit profile.
- Fair Credit Billing Act (FCBA): The FCBA protects consumers from unfair billing practices and provides a mechanism for addressing billing errors.
- Consumer Financial Protection Bureau (CFPB) guidelines: The CFPB guidelines offer additional protection and resources for disputing unauthorized charges.
Understanding the laws that are designed to protect individuals from unfair credit card billing practices can empower you to take the necessary steps to rectify inappropriate billing situations.
What steps can you take if you are incorrectly billed?
If you find yourself facing unauthorized charges on a company credit card, it is important to take steps to rectify the situation. Some steps you can take include:
- Review your credit agreement: Make sure that you understand the terms and conditions of your credit agreement, especially regarding personal guarantees and liability.
- Contact the credit card company: Reach out to both the issuer and the credit reporting agencies to dispute the charges. Provide documentation to support your claim, such as billing statements showing the card was billed to the business, payment records and records showing that you were only an employee/authorized user (if applicable).
- File a complaint: If the credit card company is unresponsive, consider filing a complaint with the CFPB or the Virginia Attorney General’s office.
- Monitor your credit report: Regularly check your credit report for any discrepancies that might arise from unauthorized billing. This can help you catch and address issues early. Make sure you promptly dispute, in writing and with backup documentation, any inaccurate credit reporting.
In addition, it can help to seek legal guidance. Consulting an experienced consumer rights attorney can help you understand your rights. An attorney can also take appropriate action on your behalf.
Take decisive action: Resolve unfair credit card bills
When you better understand how credit card companies can push the limits by automatically charging business owners, it is easier to see when mistakes are made. Understanding inappropriate billing practices can help you take the necessary steps to protect your rights and effectively resolve unauthorized charges. In addition, an experienced consumer protection lawyer can provide legal guidance and advice to help you resolve these frustrating situations.