CompuCredit Corp. v. Greenwood
Issues
Does the plain language of the CROA create a non-waivable right to sue, thereby voiding a consumer contract’s binding arbitration agreement?
Respondents Wanda Greenwood, Ladelle Hatfield, and Deborah McCleese each applied for an Aspire Visa credit card that petitioner CompuCredit Corporation marketed. Petitioner Synovus Bank issued the Aspire Visas after each respondent signed an agreement containing a binding arbitration provision. When respondents were charged card-related fees, they filed a class-action lawsuit on behalf of themselves and others similarly situated alleging that petitioners engaged in deceitful marketing in violation of the Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq. (“CROA”). CompuCredit moved to compel arbitration pursuant to the pre-dispute arbitration agreement. The district court acknowledged the strong federal policy favoring arbitration, but held that the CROA created a non-waivable right for consumers to sue in court. On appeal, the Ninth Circuit upheld the decision that the arbitration agreements were unenforceable under the CROA. Petitioners argue that the contract between the parties should be honored and the binding arbitration clause enforced. Respondents contend, however, that Congress intended to preserve the right to bring a claim in court when it enacted the CROA. The Supreme Court’s decision will consider the balance between consumers’ right to contract and providing adequate protections for vulnerable consumers. This decision will affect the enforceability of consumer contracts’ pre-dispute arbitration agreements and the extent to which arbitration may act as an acceptable substitute for an individual’s access to court.
Questions as Framed for the Court by the Parties
Whether claims arising under the CROA are subject to arbitration pursuant to a valid arbitration agreement.
CompuCredit Corporation considered a credit repair organization for purposes of this case, marketed a subprime credit card called Aspire Visa to consumers with impaired credit records. See Greenwood v. CompuCredit Corp., 615 F.3d 1204, 1205 (9th Cir. 2010). As the card’s exclusive marketer and advertiser, CompuCredit Corp.
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Edited by
The authors would like to thank former Supreme Court Reporter of Decisions Frank Wagner for his assistance in editing this preview.
Additional Resources
• LII: Arbitration
• LII: Consumer Credit
• Fordham Law Review, Genevieve Hanft: Giving Arbitration Some Credit: The Enforceability of Arbitration Clauses under the Credit Repair Organizations Act.
• Harvard Law Review: Ninth Circuit Holds that Statutory Ban on Arbitration is Nonwaivable— Greenwood v. CompuCredit Corp., 615 F.3d 1204 (9th Cir. 2010).