By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.
The Supreme Court has ruled in CompuCredit Corp. v. Greenwood that a binding arbitration clause of a credit card agreement may be enforced under the Credit Repair Organizations Act. Individuals who applied for and received an Aspire Visa credit card marketed by CompuCredit Corporation and issued by Columbus Bank and Trust, now a division of petitioner Synovus Bank, agreed to be bound by an arbitration agreement included in their applications. The cardholders later filed suit against CompuCredit and Columbus, alleging violations of the CROA. The District Court for the Northern District of California denied the defendants' motion to compel arbitration, concluding that Congress intended CROA claims to be nonarbitrable, and, on appeal, the Ninth Circuit Court of Appeals affirmed the lower court's decision.
The Supreme Court reversed the lower courts' decisions and remanded the case, holding that because the CROA is silent on whether claims under the Act can proceed in an arbitrable forum, the Federal Arbitration Act requires the arbitration agreement to be enforced according to its terms. The Court reasoned that the FAA requires that courts enforce arbitration agreements according to their terms, even when federal statutory claims are at issue, unless the FAA's mandate has been “overridden by a contrary congressional command.” The Court determined that the CROA provides no such command and that at the time of the CROA's enactment in 1996, arbitration agreements were commonplace, so Congress would have more explicitly prohibited such agreements in the CROA had it meant to do so.