Supreme Court rules for banks in credit card dispute

In a blow to consumers with poor credit ratings, the Supreme Court ruled today that disputes between cardholders and companies that issue credit cards to people with weak credit can be handled through arbitration.

The justices ruled 8-1 to reverse a San Francisco appeals court ruling allowing cardholders to sue in federal court.

The latest high-court ruling is another in a series of decisions by the high court in favor of arbitration. Consumers in the suit had argued that they were promised an initial $300 in available credit, but were charged $257 in fees in the first year they had the credit card.

But the high court agreed with the companies that the dispute must be settled solely through arbitration under an agreement that the customers signed when they received their credit card.

Justice Ruth Bader Ginsburg dissented, saying the decision permitted credit-repair companies to deny cardholders "through fine print in a contract an important right whose disclosure is decreed" by the Credit Repair Organizations Act.

That law, signed by President Clinton in 1996, said consumers have the right to sue, which the federal appeals court in San Francisco determined was a right to go to court, rather than be compelled to submit to arbitration.

Appeals courts in Philadelphia and Atlanta have ruled otherwise in evaluating the same language in the law. Now the Supreme Court has resolved the conflict between all appellate courts in favor of the companies.

This article contains material from the Associated Press.