Supreme Court rules in favor of arbitration

Jan 10, 2012, 3:35 PM

WASHINGTON (AP) – The Supreme Court ruled Tuesday that disputes between consumers and companies that issue low-rate credit cards to people with bad credit ratings can be handled in business-friendly arbitration, rather than federal court.

The justices voted 8-1 to reverse a federal appeals court ruling allowing consumers to sue in federal court, the latest in a string of recent high court decisions in favor of arbitration. The consumers said they were promised an initial $300 in available credit, but were charged $257 in fees in the first year they had the credit card.

But the court, with only Justice Ruth Bader Ginsburg dissenting, agreed with the companies’ argument that the dispute must be settled through arbitration, under an agreement that the customers signed to receive the card.

The federal Credit Repair Organizations Act, signed by President Bill Clinton in 1996, says consumers have a right to sue, which the federal appeals court in San Francisco interpreted as a right to go to court, rather than be forced to submit to arbitration.

Appeals courts in Atlanta and Philadelphia have ruled otherwise in evaluating the same language in the law.

The Supreme Court has resolved that conflict among appeals courts in favor of business interests.

The case is CompuCredit Corp. v. Greenwood, 10-948.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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Supreme Court rules in favor of arbitration