Supreme Court Ruling On Credit Card Arbitration Has Consumer Advocates In An Uproar

According to a recent ruling made by the Supreme Court, largely supported by US Supreme Court Justice Antonin Scalia, consumers who sign a credit card agreement which features an arbitration clause do not have the option to dispute any charges or fees in the courtroom. The decision, which was 8-to-1, immediately riled up many consumer advocacy groups.

In order to obtain a credit card, a consumer must first sign a highly detailed credit card agreement provided by the issuer. In almost all cases there is an arbitration clause nestled somewhere within the fine print that should the cardholder want to dispute fees at any point, they may do so but only through arbitration. This means that they cannot file a suit in court.

There exists a 1996 federal law which allowed disgruntled consumers to take their disputes against their credit card issuer to court. However, the afore-mentioned Supreme Court ruling declared that the arbitration clauses contained within credit card agreements surpass that law. The president of the Center for Responsible Lending, Michael Calhoun, says that the
Supreme Court ruling gives credit card providers, in addition to companies that provide borrowers with automobile and student loans, an inordinate amount of power. This is
due to the fact that if consumers have no legal recourse, they are able to exact any fee they so choose. �These arbitration clauses have become a �get out of jail free� card,� said Calhoun, according to National Public Radio.

As a result, practically every consumer loan agreement now has an arbitration clause written into it. The

primary exception to this rule is mortgage loans, because in that instance such arbitration clauses are strictly prohibited. The managing attorney at the National Consumer Law Center Lauren Saunders claims that, in fact, the arbitration process is unfair due to the financial incentive the arbitrators have to rule in favor of lenders. �Who are you going to favor, the company that might send you more business, or the consumer who you�ll never see again?� Saunders said, as reported by NPR. However, this issue is likely far from being put to bed. Consumer advocates are pushing for the newly instituted Consumer Financial Protection Bureau to closely study these arbitration clauses which could ultimately result in their being banned from all consumer credit card agreements.