CompuCredit, Concepcion, and The Death of Consumer Rights
Imagine this: a credit card company advertises its services to low income families and individuals offering a $300 upfront credit line. Okay, not a pot of gold at the end of the rainbow, but it’s something that may help ends meet at the end of the week. Ahha! Gotcha! But when the consumer accepts the card, smack, “You owe us $257 in fees,” leaving only $43 in available credit. A scam to be sure, perpetrated on those most vulnerable. But this is America, we have the best legal system in the world, surely someone can take my case and put an end to this exploitation and evil. Right?
Nope. The courthouse doors are locked shut. Sorry folks but those wealthy guys on the Supreme Court do not feel your pain. As we’ve blogged before, the Supreme Court held in ATT v. Concepcion that “take it or leave it” contracts mandating arbitration and prohibiting class actions – even where damages are small and only remedied by class actions – are acceptable despite years of contradictory state practice. As a result, arbitration clauses have been added to innumerable consumer contracts.
The Court’s January 10th opinion in CompuCredit Corp. v. Greenwood reinforced the Court’s deference to the whims of corporate desires. Eight justices agreed (only Justice Ginsburg dissented) that the Credit Repair Organizations Act, because its clause providing a “right to sue” is silent on arbitration, allows corporations like CompuCredit to mandate arbitration. This firmly establishes the preference for arbitration even in the face of glaring injustice.
So, ladies and gentlemen, that means the low income families targeted by this venal practice have no right to go to court to seek judicial redress for the fraud foisted on them by CompuCredit. According to the Supreme Court, the “right to sue” means only the right to submit to binding arbitration (which not only often favors corporations but is just a non-starter for working and poor people alike). But, as a practical matter, the only way these low income families or just about anyone can move forward and protect their rights is by joining a class and proceeding in court. And that road is closed until further notice. For another reading, Michelle Singletary’s piece in WAPO summarizes the current state of affairs quite nicely.
Simply put, change is needed. Without congressional or judicial action, consumers will soon find themselves without recourse for a majority of corporate grifting. Rulings like Concepcion and CompuCredit are unacceptable for the low income family tricked into $257 of fees and just $43 of credit. It will be nearly impossible to fight a major corporation for just $257 without the help of an attorney or the cost sharing of a class suit. When class actions are stymied, consumers lose and corporations win – big – or so they think. Eventually everyone loses when the system is devoid of fairness.
Assisted by Zachary A. Kady
Steven N. Berk has over twenty years of litigation experience spanning both the private and public sectors. His practice ranges from representing Fortune 500 Companies, to consumers. Steven is based in Washington, D.C. and founded Berk Law in May 2009....
