Can a business apply for credit cards in your name?

[Sylvestor McBean]

Jurisdiction

Utah

First off, let me say that I have found this to be a very useful and friendly forum, so thank you to everyone who contributes their time here. I'll briefly describe my situation:

I'm starting a business and I found it difficult to get traditional financing. I found an odd little company based in Utah (but with their LLC in Wyoming, presumably for tax purposes) who said they could get me 60k at 0%. Upon digging deeper, it turns out they apply for consumer credit cards in my name that have promotional 0% interest rates. They supposedly do this in a strategic way that minimizes the hit of 8+ inquiries on your credit report and makes successful credit card applications more likely. Their fee for this service was roughly $3500. I was made to believe that this fee only kicked in once they achieved their goal of 60k in funding.

In the end, this company was only able to get me 40k, however 15k of this was not at 0%, but rather 13.5%. They then expected me to pay their full $3500 fee. I told them I wouldn't, and now they're threatening to take me to court. My questions are:

1) Is it even legal for this company to be applying for credit cards in other people's names? In the contract they make you sign there IS a section where I ostensibly give them permission to do this for me, however wouldn't they legally require a Power of Attorney document to engage in financial transactions on my behalf? If the foundation of their business is illegal, is it really going to benefit them to take me to court?

2) This company has obviously run into problems with dissatisfied customers before, because in their contract there is this clause:

"This Agreement shall be construed in accordance with and governed by the laws of the State
of Utah, irrespective of its conflict of laws principles. Any and all ligation related to this
Agreement or actions stemming therefrom shall be adjudicated in Salt Lake County, Utah, in a
court of competent jurisdiction."

This is nonsense, right? My understanding is that if they decide to take me to small claims court, they'll have to do so where I live (Kansas), as a Utah court has no jurisdiction over me. Amusingly, from what I can tell they are not a legal entity in Utah but rather Wyoming, so I think the litigation as they imagine it would actually have to take place there.

Thank you for any help you can provide!

 

[army judge]

1) Is it even legal for this company to be applying for credit cards in other people's names?

Legal is determined after due process has run its course, as in a trial and a verdict has been rendered.

This might be far more nefarious than you imagine, such that your part in this could cause you trouble, too.

"This Agreement shall be construed in accordance with and governed by the laws of the State
of Utah, irrespective of its conflict of laws principles. Any and all ligation related to this
Agreement or actions stemming therefrom shall be adjudicated in Salt Lake County, Utah, in a
court of competent jurisdiction."

This is nonsense, right?

Possibly, again, such statements are why people litigate their disputes before courts of law.

My understanding is that if they decide to take me to small claims court, they'll have to do so where I live (Kansas), as a Utah court has no jurisdiction over me.

Don't assume you'll be sued in small claims court, mate.

In fact, never assume anything.

 

[Zigner]

The clause is a fairly standard clause. One is contractually able to submit themselves to jurisdiction that would not otherwise apply.

 

[adjusterjack]

1) Is it even legal for this company to be applying for credit cards in other people's names?

It is if you authorize them to do so, which is what you did.

wouldn't they legally require a Power of Attorney document to engage in financial transactions on my behalf?

No.

Your signature on the contract was all the "power of attorney" needed for them to apply in your name.

If the foundation of their business is illegal, is it really going to benefit them to take me to court?

It's not illegal so you aren't getting out from under it that way.

"This Agreement shall be construed in accordance with and governed by the laws of the State of Utah, irrespective of its conflict of laws principles. Any and all ligation related to this Agreement or actions stemming therefrom shall be adjudicated in Salt Lake County, Utah, in a court of competent jurisdiction."

This is nonsense, right?

No, it isn't.

My understanding is that if they decide to take me to small claims court, they'll have to do so where I live (Kansas),

Not since you signed the contract authorizing another jurisdiction.

Amusingly, from what I can tell they are not a legal entity in Utah but rather Wyoming, so I think the litigation as they imagine it would actually have to take place there.

That's another mistake you are making. They are a legal entity in any state that recognizes non-resident entities, which is probably all 50 states.

My guess is that you didn't carefully read the contract when you agreed to it. You probably missed the part that says they don't guarantee 0% on all the credit nor do they guarantee it as a permanent. And the part that says this is the entire contract and anything said outside the contract doesn't count.

I was made to believe that this fee only kicked in once they achieved their goal of 60k in funding.

I'll bet the contract says something entirely different.

 

[zddoodah]

You might not be receiptive to this, but your post tells me that, for you to have any chance of succeeding in running your business, you should take a basic business law class.

I was made to believe that this fee only kicked in once they achieved their goal of 60k in funding.

How were you "made to believe" this? You said you signed a contract with this company. Did you read the contract before signing? What does the contract say about this?

Is it even legal for this company to be applying for credit cards in other people's names?

If you authorized the company to do this, yes.

In the contract they make you sign there IS a section where I ostensibly give them permission to do this for me

What do you mean by "ostensibly give"?

wouldn't they legally require a Power of Attorney document to engage in financial transactions on my behalf?

No.

2) This company has obviously run into problems with dissatisfied customers before, because in their contract there is this clause:

"This Agreement shall be construed in accordance with and governed by the laws of the State
of Utah, irrespective of its conflict of laws principles. Any and all ligation related to this
Agreement or actions stemming therefrom shall be adjudicated in Salt Lake County, Utah, in a
court of competent jurisdiction."

This is nonsense, right?

No it's not nonsense. Why would you think that? Nor is it an indication that the "company has . . . run into problems with dissatisfied customers in the past." Choice of venue and choice of law provisions are routine in business contracts and, in my opinion, where a company routinely does business with persons/entities in other states, it would be bad business not to include a provision like this.

My understanding is that if they decide to take me to small claims court, they'll have to do so where I live (Kansas), as a Utah court has no jurisdiction over me.

It is entirely possible that a Utah small claims court would not have jurisdiction over a non-resident, but that doesn't mean a non-small claims court wouldn't have jurisdiction. Indeed, the choice of venue clause you quoted effectively gave a court in Salt Lake County, Utah jurisdiction over you.

Amusingly, from what I can tell they are not a legal entity in Utah but rather Wyoming, so I think the litigation as they imagine it would actually have to take place there.

I'm not sure why you would find any of this amusing. You wrote that the company is "based in Utah (but with their LLC in Wyoming." I'm not sure to whom "their" refers, but I assume what you meant is that the LLC was formed under the laws of Wyoming. If that Wyoming LLC has not qualified as a foreign entity to do business in Utah, then a lawsuit filed in a Utah court might be defensible on the basis that the LLC lacks the capacity to sue in Utah. Of course, something like that could be easily cured (although it's not automatic, as "adjusterjack's" response implies).

 

[Sylvestor McBean]

So if a representative of this company called up Capital One and said, "Hello, I would like to open a credit card in my client's name. I don't have Power of Attorney, but I do have this document that they signed giving me permission to do this." Would Capital One be okay with that? If not, on what grounds would they object? Whatever their reason for objecting, would that not apply to online credit card applications too?

If I'm understanding the comments about the jurisdiction issue, it sounds like suing me in Utah small claims court would not be possible as the court would lack jurisdiction, not to mention I think I'd have to be served within Utah. I could potentially be sued in non-small claims court, since I consented to their jurisdiction, but is that realistic over a $3500 debt? Surely legal fees on the part of the company would exceed that amount.

 

[adjusterjack]

So if a representative of this company called up Capital One and said, "Hello, I would like to open a credit card in my client's name. I don't have Power of Attorney, but I do have this document that they signed giving me permission to do this." Would Capital One be okay with that?

Hmmm, let's see, nope, can't seem to connect with anybody's mind at Capital One. Why don't you call Capital One and ask if that would be OK?

If not, on what grounds would they object?

Um, cause it's not you.

Whatever their reason for objecting, would that not apply to online credit card applications too?

No, of course not. Because the online applications just fill in your name and your information without revealing that it's being done by somebody who isn't you.

is that realistic over a $3500 debt?

It only has to be realistic to the person doing the suing.

Surely legal fees on the part of the company would exceed that amount.

I'll bet that your contract has an attorney fee provision so you'd be paying their attorney fees when you lose.

 

[zddoodah]

So if a representative of this company called up Capital One and said, "Hello, I would like to open a credit card in my client's name. I don't have Power of Attorney, but I do have this document that they signed giving me permission to do this." Would Capital One be okay with that?

I haven't the slightest idea. You'd have to ask someone with that particular bank. However, I think you know as well as I do that this is not what's happening and that the company is making the applications online.

Whatever their reason for objecting, would that not apply to online credit card applications too?

I suspect that, if a credit card issuer knew what was happening, it might not allow it. However, that's neither here nor there. You authorized this company in writing to do what it did and therefore have no basis to object to paying the fee that you agreed to pay. Moreover, if you objected to paying the credit card bills on the basis that the company didn't have proper authorization, you'd lose because you gave written authorization. That the written authorization might not be a power-of-attorney is neither here nor there.

If I'm understanding the comments about the jurisdiction issue, it sounds like suing me in Utah small claims court would not be possible as the court would lack jurisdiction, not to mention I think I'd have to be served within Utah.

I said it's possible that a UT small claims court wouldn't have jurisdiction over a non-resident. It is the case in many states that small claims courts' jurisdiction is more limited than regular courts. I haven't looked up the rules to know for sure.

I could potentially be sued in non-small claims court, since I consented to their jurisdiction, but is that realistic over a $3500 debt?

Yes.

Surely legal fees on the part of the company would exceed that amount.

I'll bet $5 that the contract you signed provides that, in the event of litigation arising out of the contract, the loser will have to pay the winner's attorneys' fees.

 

[Zigner]

It's also quite possible that the company has an attorney on staff, which means that there are no real additional legal fees (beyond the cost of filing). The attorney gets paid either way.

 

[Sylvestor McBean]

LOL. I retract my statement about people on this forum being friendly.

 

[justblue]

LOL. I retract my statement about people on this forum being friendly.

No one was unfriendly. They just didn't give you the answer you wanted. Perhaps you could pay a friendly attorney $400.00 or $500.00 to advise you.