Is it OK for Merchants to Accept Credit Cards from Minors?

Dear Your Business Credit,

Can I accept a credit card payment from a minor at a medical facility if it's offered?

- Mitchell

Dear Mitchell,

I'm going to assume that you work in a medical practice, and the reason you are asking this is to avoid accepting payments that are invalid.

If you have obtained the parental consent that's necessary under laws in your state to treat the minor, or the minor is an emancipated youth, accepting a credit card the young person is legally authorized to use isn't likely to present a problem, according to Robert F. Brennan, an attorney in La Crescenta, Calif., who specializes in wrongful credit damage cases, as well as identity theft cases.

If a minor incurs a medical charge and later does not pay the credit card bill, then collecting it becomes the credit card issuer's problem, he notes. "The doctor already has his money," he explains.

Ultimately, if a minor can't cover the debt, it is likely to become a parent's problem. Under the Credit Card Accountability Responsibility and Disclosure Act of 2009, credit card issuers are not allowed to issue credit cards to young people under age 21 unless a parent is a co-signer -- meaning the parent has assumed responsibility for the debt -- or youthful applicants can show independent proof they have the income to pay the bill. What's more likely is that a young person who proffers a credit card is an authorized user, legally able to use the card, but not liable for the debt. Authorized users may have cards issued in their own names.

"It is extremely unlikely and rare that a minor would have a credit card without a guarantor or co-signer on the account, which would be the case if they are an authorized user on their parent's account," says Leslie Tayne, an attorney based in Melville, N.Y., who advises small businesses on credit and debt. "If there is a guarantor on the account, then the debt is collectable."

To be on the safe side, I'd steer clear of accepting any cards for which a patient may be an unauthorized user -- such as a card issued to another family member. While a teen who hands you a parent's credit card likely may have the OK to use it, you can't know that for sure unless the parent has told you so, either by phone or in person.

Generally speaking, medical providers protect themselves from nonpayments if they treat a minor by having a separate contract with the parents, according to Michael Jeffrey Gunderson, a bankruptcy attorney at Gunderson & Tharp, LLC in Chicago. "Most providers know they can't hold a minor liable, so they get the parents on the hook," he says.

If you don't have an agreement like this for parents to sign, now is a good time to have your attorney draft one.