The ABA Journal reported that the Supreme Court “has ruled that consumers who received the Aspire Visa credit card are bound by a mandatory arbitration provision in their applications.” Justice Antonin Scalia wrote the majority opinion in the case, CompuCredit Corp. v. Greenwood, with Justice Ruth Bader Ginsburg was the only dissenter. The class-action lawsuit under the Credit Repair Organizations Act featured plaintiffs who claimed they were promised $300 in available credit for a low-rate Aspire Visa card, but were charged $257 in fees during the first year, noting that the Act requires credit repair organizations to tell consumers, “You have the right to sue a credit repair organization that violates the Credit Repair Organization Act.” Gary Paul, president of the American Association for Justice, “criticized the decision in a press release.” The AAJ release stated, “With this ruling, the US Supreme Court has given corporations a way to escape accountability by forcing consumers into a rigged and biased forced arbitration process, even when Congress expressly provides a remedy in a court of law.”
The Los Angeles Times adds that although the 1996 law specifically gave customers the right to sue any firm in violation, the Supreme Court “ruled Tuesday that credit repair companies could block such lawsuits and instead force disgruntled customers into binding arbitration if they had agreed to such a provision in the fine print of their agreements.” The Times observes that the decision “is another in a string of high court rulings in recent years that have backed an arbitration clause over a customer’s right to file a lawsuit,” and notes that the trend “alarms some consumer advocates, who complained that arbitration proceedings typically favor companies and remove the strong deterrent of class-action lawsuits.”
The AP reported that the 9th Circuit had interpreted the 1996 law’s provision giving consumers a right to sue as being “a right to go to court, rather than be forced to submit to arbitration,” although two other federal appellate courts had ruled otherwise. Reuters and the Wall Street Journal /Dow Jones also reported the story.
Some major credit cards are dropping arbitration. Even as the Supreme Court was overruling a 9th Circuit decision that the Credit Repair Organizations Act barred mandatory binding arbitration, CreditCards.com reports that some of the nation’s largest credit card companies, including Chase, Bank of America and Capital One, “have announced that they are dropping the arbitration requirement from their consumer agreements or will not enforce it.” The article also noted that the Minnesota attorney-general had sued a major arbitration firm for deceptive practices, and that the American Arbitration Association had called for reforms in mandatory arbitration.
From the American Association for Justice press release.