U.S. Supreme Court

Supreme Court Upholds Arbitration Provision in Credit Card Contract

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The U.S. 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 (PDF) in the case, CompuCredit Corp. v. Greenwood. The decision overturns a ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals. Justice Ruth Bader Ginsburg was the only dissenter.

The plaintiffs had claimed in a class action suit that they were promised $300 in available credit, but were charged $257 in fees. They maintained that the Credit Repair Organizations Act gave them a right to sue. They cited a provision in the CROA requiring credit repair organizations to tell consumers, “You have the right to sue a credit repair organization that violates the Credit Repair Organization Act.”

Scalia said the provision gives consumers a right to receive the statement, but not a right to sue. At the time the CROA was enacted, he wrote, arbitration clauses in consumer contracts were no rarity. “Had Congress meant to prohibit these very common provisions in the CROA, it would have done so in a manner less obtuse than what respondents suggest,” he said.

Justice Sonia Sotomayor concurred in the judgment in an opinion joined by Justice Elena Kagan. “I find this to be a much closer case than the majority opinion suggests,” Sotomayor wrote.

According to Reuters, the ruling “was the latest in a series by the Supreme Court in recent years that generally favored arbitration.”

Gary Paul, president of the American Association for Justice, criticized the decision in a press release. “With this ruling, the U.S. 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,” he said.

Prior coverage:

ABAJournal.com: “Does Law Provide a Right to Sue over a $257 Credit Card Fee? Justices Mull the Issues”

ABAJournal.com: “Supreme Court to Hear Arbitration Case re Consumer Rights Under Credit Repair Law”

Updated at 1:15 p.m. to include statement by Gary Paul.

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