Sister ran up credit card - fraud? (2nd fraud incident on this card)

[jgombos]

What is the name of your state? OH and CA

Lead-in story:

I put my sisters name on some of my credit cards, and let her run them up when she was going through a crisis. It got out of control; Over $20k in a year. At the end of the year, I told her no more charging. I consolidated her debt onto one low-rate card and instructed her only to pay on it - no charges. I believe I ensured she would not receive a card by default, but she always had the option of requesting one since her name was on it (I put her name on it purely so she could receive the bills directly and get account information).

She was paying it (sometimes late), then out of the blue began running it up. I discovered it two weeks into her shopping spree - another thousand in high interest rate purchases now buried by a low-rate debt. Some of these purchases are magazine subscriptions, and a gym membership, which could thereotically be revoked before the damage is done. I cancelled the card immediately, but the damage remains.

I called Amazon.com and told them to cancel the subscriptions. They said her charges were fraudulent - even though she was an authorized card holder, she was not authorized to make those purchases. They said they would treat it like corporate account cases where an employee may be authorized only to make gasoline purchases, but they buy an iPod, for example. They said I need to report the charges to the bank as fraudulent, then they can work with the bank to get the subscriptions cancelled. Sounds unlikely. I think the bank will laugh considering she was an authorized user.

Question:

What are the consequences of me reporting the shopping spree as fraud, and stating that my sister was not authorized by me to use the card in that way?

Side note- 5 years ago a roommate stole all my credit cards and ran them up. I had all the charges removed and all accounts flagged as fraud accounts. Does it change anything if this is a second incident with this card account?

BTW- I just read this similar story, and was surprised to hear that the OP had no protection from her brothers fraudulent charges. Does fraud protection not extend to victims of family members?

 

[Debt Guy]

when you made your sister an authorized signer, it was like co-signing a note for her.

You are legally responsible for her charges. It does not matter what she spent the money for. You made a bad decision and you got to live with that mistake. Why do you think that someone else should eat the loss for what your sister did?

Personally, I think the rep at Amazon gave you bad advice. You can call it fraud if you want but I don't think it will work. If I were the bank, my response would be "so sorry".

The only shot at convincing the bank it was fraud would be to file a police report and hope the District Attorney files criminal charges. I just don't see that happening.

 

[jgombos]

when you made your sister an authorized signer, it was like co-signing a note for her.

You are legally responsible for her charges. It does not matter what she spent the money for.

You may be right.. but for the sake of argument, what's your thought in the scenario where an employer distributes credit cards to employees, and consents only to travel expenses? Say the employee buys DVDs, electronics, and other gadgets? Is that not fraud?

You made a bad decision and you got to live with that mistake.

I would only call it a poor decision if the information I had at the time suggested that this would happen. Only now do I have enough information to know she cannot be trusted.

Why do you think that someone else should eat the loss for what your sister did?

The same reason I expected the bank to eat a loss when my credit cards were stolen. Credit cards come with insurances - protection inherent in having a visa/mastercard logo. I've also had a product fail after the mfr warrenty, but before the mastercard extended warranty, and I expected the bank to eat the loss then too. I would also say it's in the banks interest to eat these kinds of losses, because they make more money off me when the protections are there to encourage me to use their financial products.

It's all a matter of understanding the coverage. Is fraud not covered when it's committed by an authorized user? I don't know, but I don't think it's a silly idea, considering I cannot ask the bank to only authorize some activity, ala carte.

If I were the bank, my response would be "so sorry".

I would agree. The bank would be foolish to eat fraud charges that they are not contractually required to - it would be poor business. The question is whether they are required to.

The only shot at convincing the bank it was fraud would be to file a police report and hope the District Attorney files criminal charges. I just don't see that happening.

I probably would not take it that far. But if I can keep the issue within the bank - what effect would it have to make a fraud claim for the second time? Will it damage my credit score more than say a few late charges? I'm figuring the increased size of the debt will lead to more defaults as my sister will take more time to pay it off.

 

[Zigner]

It's not Fraud. You made her an authorized signer. The CC is not required to micro-manage the card make sure that an authorized signer is authorized to buy that particular item.
Now, you may have a civil claim against your sister - but not fraud.

 

[Some Random Guy]

You may be right.. but for the sake of argument, what's your thought in the scenario where an employer distributes credit cards to employees, and consents only to travel expenses? Say the employee buys DVDs, electronics, and other gadgets? Is that not fraud?

Its not credit card fraud where the charges are fraudulent and the bank will eat the loss. The employee is authorized to charge on the card and that is all that matters to the CC company. It is instead a violation of the employee's employmnt agreement and may be embezzlement. It is a matter between the employer and the employee.

Likewise, if you want to get your money back, feel free to sue your sister. Oh, she has no money? Well, then you shouldn't have placed her in a position where she could defraud you.