January 9, 2011
The Supreme Court ruled this week that consumers who sign credit card contracts containing an arbitration clause cannot dispute charges in court.
The court’s 8-1 decision overturns a 1996 law that enabled consumers to take disputes to court, according to NPR. Synovus Bank, the central FI in this case, declined to comment afterward.
The news outlet reports that the ruling has angered consumer watchdog groups.
Lauren Saunders, the managing attorney at the National Consumer Law Center, told NPR that the idea of arbitration with regards to credit card agreements is flawed, as the arbitrators have motive to rule in favor of the card companies.
"Who are you going to favor, the company that might send you more business, or the consumer who you'll never see again?"
Michael Calhoun, president of the Center for Responsible Lending, feels the arbitration clauses have become a “get out of jail free card” for card companies.
“Calhoun 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,” reports NPR. “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.”