Credit Card Arbitration Trumps Lawsuits, Court Says | WAMU 88.5 - American University Radio
Filed Under:

Credit Card Arbitration Trumps Lawsuits, Court Says

Play associated audio

Consumers who sign credit card agreements that feature an arbitration clause cannot dispute fees or charges in court, the Supreme Court ruled Tuesday. The 8-to-1 decision drew immediate fire from consumer advocates.

To get a credit card, a consumer generally must sign a detailed agreement. In the fine print, almost always, is an arbitration clause that says that if consumers want to dispute fees, they must do so through arbitration, not in court.

A 1996 federal law allowed consumers to take their disputes to court. But in its ruling Tuesday, the Supreme Court said arbitration clauses in those agreements trump that law.

Michael Calhoun, president of the Center for Responsible Lending, says the ruling gives companies that provide credit cards, student loans and car loans the ability to exact any fee, because consumers have no legal recourse.

"These arbitration clauses have become a 'get out of jail free' card," he says.

And that's why nearly every loan agreement now includes an arbitration clause. The main exception is for mortgage loans, where such clauses are prohibited.

Lauren Saunders, the managing attorney at the National Consumer Law Center, says the arbitration process itself is unfair because the arbitrators have a financial incentive to rule against consumers.

"Who are you going to favor, the company that might send you more business, or the consumer who you'll never see again?"

The company involved in this case, Synovus Bank, declined to comment. The American Bankers Association said it was not available for an interview.

This may not be the last word on this issue. Consumer advocates say the new Consumer Financial Protection Bureau may study arbitration clauses and could ban them from credit card agreements.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

NPR

The Exquisite Dissonance Of Kehinde Wiley

The Brooklyn Museum's mid-career Wiley retrospective wraps up this week; his large, elaborate works depict black men and women in traditional forms like oil, bronze sculture and even stained glass.
NPR

In New Jersey, A Beef Over Pork Roll Sparks Rival Festivals

What is pork roll? As one fan puts it, "It's like Spam meets bacon." And this Saturday, Trenton, N.J., will host not one, but two competing festivals devoted to this Garden State meat delicacy.
NPR

Fast-Track Trade Authority, A Step Toward Asia Deal, Passes Full Senate

The bill still must clear the House. The measure would clear the way for President Obama's Trans-Pacific Partnership, which is unpopular with labor groups and some Democrats.
NPR

The Future Of Cardiology Will Be Shown In 3-D

The Living Heart Project aims to create a detailed simulation of the human heart that doctors and engineers can use to test experimental treatments and interventions.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.