Court Rules for Arbitration in Credit Card Case

January 10, 2012

The U.S. Supreme Court has ruled for Synovus Financial and CompuCredit Holdings, agreeing that credit card claims by consumers under the Credit Repair Organizations Act must be handled in arbitration -- not in court. The decision, which overturned a ruling by a U.S. appellate court in San Francisco that said the language in the 1996 law was intended to bar arbitration of claims, favors businesses by keeping customer claims from being lodged as a class action. Three customers of CompuCredit and Synovus sued the firms in federal court over the marketing and issuance of a low-rate Aspire Visa card to borrowers with poor credit. The plaintiffs claimed they were promised $300 in available credit but were charged $257 in fees during the first year the account was open. The fees, they argued, were illegal; and they also accused the companies of failing to make required disclosures. While the customers sought to represent a national class of card holders nationwide, CompuCredit and Synovus cited a binding arbitration clause in the card contract that the customers signed in order to receive the card. "Had Congress meant to prohibit these very common provisions," Justice Antonin Scalia wrote in the decision, "it would have done so" in a more direct fashion.
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