Your AARP ; The Law
By Emily Sachar
; Ask the
Experts
; The issue: Can Congress protect a victim’s right to file a lawsuit?
Three California women thought they would each get $300 in credit when they received new Aspire Visa credit cards.
Instead, they now say, they were each charged
$257 in unexpected fees and finance charges. So
in 2008, they went to court.
Their class action lawsuit, and whether the women have the right to go to court, are the core issues
in a legal dispute that has risen all the
way to the U.S. Supreme Court.
The women, supported by an AARP
friend-of-the-court brief, argue that
Congress clearly protected them
against hidden fees and guaranteed
their right to go to court. CompuCredit Corp., the credit card company, insists that a binding arbitration
provision in their contract prevents
them from going to court. Appeals
court rulings in similar cases found
that, contrary to the ruling in this case, the arbitration provision is enforceable. The U.S. Supreme Court will resolve the conflict this fall.
In two other cases, CompuCredit settled with
the Federal Trade Commission and the New York
Attorney General’s Office at a cost of $118 million.
In the California case, as many as 86,800 cardholders, including the three women, sought the
CompuCredit cards, which were marketed as a
way to “rebuild poor credit.” After the women
discovered the fees and charges imposed by the
cards, they sued CompuCredit. The firm argued
that the card holders needed to file individual
claims in arbitration.
“This case is another example of how people are
losing their right to go to court to seek a remedy,”
said Julie Nepveu, senior attorney at AARP Foun-
dation Litigation. At issue are provisions of the
federal Credit Repair Organizations Act (CROA),
a 1996 law aimed at protecting consumers against
exaggerated promises and hidden provisions
practiced by firms that offer services to repair
consumers’ poor credit standing. The legislation
also says: “You have a right to sue
a credit repair organization that
violates the Credit Repair Organi-
zations Act.”
In the California case, Greenwood
v. CompuCredit Corp., the U.S. Court
of Appeals noted that “as a matter
of parlance, reference and com-
mon sense, we cannot conclude
that when Congress used the word
‘sue,’ it really meant ‘arbitrate.’ ” The
judges cited Alice in Wonderland:
“Perhaps the question is, as Alice put it: ‘wheth-
er you can make words mean so many different
things.’ ” They concluded, “Congress meant what
it said,” that the right to sue cannot be waived.
CompuCredit
claims that
cardholders
should each
be required to
file individual
claims in
arbitration.
; What it means to you: If you have bad credit,
a credit card offer may seem tempting, but watch
out. If a credit card offer seems too good to be true,
it probably is. Read the fine print. If it has an arbitration clause, you may never get your day in court.
AARP’s annual guide to pertinent U.S. Supreme
Court cases can be found at aarp.org/litigation. ;
Q My sister went through a foreclosure. Will she ever be
able to own a home again?
A In time, perhaps. A fore- closure can reduce a credit
score by 150 points and stay on a
credit report for seven years. But
here are ways to help a comeback:
; Work at a steady job.
; Build up at least six months of
savings to show you could pay
your mortgage if you lost your job.
; Don’t max out credit cards.
; Pay your bills on time.
Fannie Mae, the mortgage giant,
generally allows new loan applications in three years if a foreclosure
was due to job loss, divorce or
unexpected medical bills.
Q I think I may be due a pen- sion from a company that
went bankrupt years ago. How
can I try to find out?
A Try the “Missing Participants Search” feature at www
. pbgc.gov, the website of the Pension Benefit Guaranty Corp. Or call
the federal agency at 1-800-400-
7242. Bankrupt companies often
failed to fully fund their pension
plans. In that case, the PBGC might
pay the benefits—though perhaps
at a reduced level.
Q My son is entering college. Will Social Security benefits he’s received on his late
father’s record continue?
A Social Security used to pay benefits during a college
education but now generally limits
them to students grade 12 and
below. Unless a student has a disability, benefits stop at high school
graduation, or age 19 and two
months, whichever comes first.
Emily Sachar is a journalist and author based in
Brooklyn, N. Y.
AARP on mortgages, PBGC on pensions, Social
Security Administration on student benefits. Send
your questions to: Ask the Experts, AARP Bulletin,
601 E St. NW, Washington, DC 20049, or email
askourexperts@aarp.org. Check out bulletin.aarp
.org for previously asked questions and answers.
