The question of how far companies can go in taking away their customers’ right to sue returned to the Supreme Court this week. The case involves a subprime credit card company called CompuCredit, which was sued by three customers in federal court for deceptive practices under the 1996 Credit Repair Organizations Act.
The company argued that they were barred from bringing lawsuits because their contract allowed them to enforce their rights only through arbitration, which prevents them from having their dispute resolved by an impartial judge and jury in a public court.
The act was passed to shield people from companies making bogus promises of credit repair. It says: “You have a right to sue a credit repair organization that violates” the act and a “waiver by any consumer of any protection” shall be “treated as void” and “may not be enforced by any federal or state court or any other person.” Despite that clear language, CompuCredit’s lawyer insisted that the wording is not “sufficiently explicit” to create a right to sue if a contract contains an arbitration clause.