Yesterday the Supreme Court, Inc. - with only Ruth Bader Ginsburg dissenting -- took away consumer legal rights in Compucredit vs. Greenwood. The court said disputes needed to be resolved in arbitration proceedings -- not court. The company issues subprime "fee harvester" credit cards with upfront fees that swallow the teeny credit limits. It's previously been sued by both the FDIC and the FTC.
In a statement, our colleague Chi Chi Wu of the National Consumer Law Center said: “This Supreme Court decision benefits the worst of the worst, a company that has been sued by regulators and made hundreds of millions by selling useless, deceptive high cost credit cards that gouged consumers unconscionably. The CompuCredit “Aspire” card at issue in the Supreme Court case featured a credit limit of $300, but automatically charged a $150 annual fee, a $29 initial finance fee, and a $6.50 monthly participation fee – an instant debt of $185.50 before a single purchase was made. The consumer was then left with credit of only $114.50."
But NCLC went on to thank Congress for the CFPB: "However, Congress has given the new U.S. Consumer Financial Protection Bureau power to regulate or ban forced arbitration if necessary to prevent unfair, deceptive or abusive practices. With President Obama’s recess appointment last week of Richard Cordray as the Bureau’s director, the CFPB can get started on the study of arbitration that is required first under the statute."
In a recent report by U.S. PIRG Education Fund and Americans for Financial Reform, we explain the issue further.