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Credit Card Disputes Can No Longer be Taken to Court

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In the past, consumers who had concerns about charges or fees that had been added to their credit card accounts were able to take their lenders to court to dispute them. But thanks to a new ruling from the U.S. Supreme Court, this is typically no longer the case.

The U.S. Supreme Court recently ruled 8 to 1 against consumers’ right to take their credit lenders to court over disputed charges and fees added to their accounts, according to court documents. Instead, they will now almost always be required to take their claims to an arbitrator instead.

That’s because the court believes that the arbitration clauses which are now being included in almost all consumer credit agreements supersede borrowers’ ability to take their claims to court. Previously, a federal law passed in 1996 allowed disputes to be taken before a judge, but this ruling trumps the 15-year-old requirement.

The decision has come under fire from consumer advocates, who say that the arbitration process is less likely to be borrower-friendly, according to a report by National Public Radio. Where a court was more likely to hand down unbiased rulings, independent arbitrators are likely to have a financial stake in siding with lenders.

“Who are you going to favor, the company that might send you more business, or the consumer who you’ll never see again?” Lauren Saunders, the managing attorney at the National Consumer Law Center, told NPR.

Arbitration clauses are included in everything from

Fortunately for consumers, this may not be the end of the arbitration clause debate, the report said. The new federal Consumer Financial Protection Bureau is always looking at the ways lending contracts may be negatively affecting consumers, and experts say this decision could prompt the agency to study the end result many people face as a result of these clauses.

The CFPB recently got a boost in its power by having former Ohio attorney general Richard Cordray named to its top executive position. Within days of taking office, he expanded the purview of the agency's efforts to include more consumer financial products.

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  • Steve Ely

    This is an important step in a two-step process. Our courts are filled with frivolous lawsuits, of which many are driven by a small number of unscrupolous attorneys looking to make a buck. This helps eliminate some of that. The second step requires the CFPB to step in an make sure the arbitration clauses included in credit card policies are fair and accurate, and fully protect consumers. This process is underway.

  • Kathy

    I purchased a rug in Turkey and when I returned to the States had it appraised. Long story but the rug was not silk or worth near what I had paid. After almost 5 months working with Capitol One, and returning the rug to Turkey at thier suggestion, I have been denied a credit. The reason given was that Visa’s rule if you buy something Face to Face you should be aware of the value. If you buy it online they will stand behind you. What else can I do to protest and fight. I do not understand why they didn’t tell me on day one about the Face to Face rule.

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