Supreme Court Takes Up Credit Repair Case on Arbitration: Implications for Credit Counseling Agencies

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AICCCA's The Independent Counselor

On October 11, 2011, the U.S. Supreme Court will hear the case of CompuCredit Corp. v. Greenwood, which asks the question whether claims arising under the Credit Repair Organizations Act (“CROA”) are subject to arbitration pursuant to a valid arbitration agreement. If the Supreme Court finds in favor of the waiveability of rights under CROA and clarifies that arbitration is permitted, then it could save credit counseling agencies (“CCAs”) from costly litigation.

CompuCredit Corp. v. Greenwood

CompuCredit Corp. marketed a subprime credit card under the brand name Aspire Visa to consumers with low or weak credit scores through massive direct-mail solicitations and the Internet. CompuCredit Corp. represented the card as a tool to improve a consumer’s credit rating and guaranteed $300 available credit upon receipt of the card. The issuing bank, Columbus Bank and Trust (a division of Synovus Bank), would charge a series of fees totaling over $180 against the $300 credit limit—charges which CompuCredit Corp.’s promotional materials allegedly mentioned in small print.

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Published In: Alternative Dispute Resolution (ADR) Updates, Civil Remedies Updates, General Business Updates, Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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