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Taking Your Credit Card Company to Court

By Christopher Coble, Esq. on May 10, 2016 3:58 PM

Many creditors have disagreements with their credit card company. Whether it's a disputed charge, a surprise annual fee, or a shift in the interest rate, disputes are bound to happen.

When an issue arises, most user agreements mean consumers are obliged to resolve those disputes via arbitration rather than lawsuits. But those days may be over.

Suing a Credit Card Company

A 2012 rule from the Consumer Financial Protection Bureau (CFPB) allows consumers to bring class action lawsuits against financial institutions like credit card companies.

So what does this mean for you and your credit card dispute?

Past Credit Card Company Lawsuit Laws: Mandatory Arbitration

In the past, financial companies were quick to realize that lawsuits, especially those that found their way to juries, were unpredictable and expensive.

On the other hand, disputes resolved via arbitration (through an unbiased third party rather than the courts) were more favorable to the financial institution. There was also the added benefit that arbitration proceedings could be confidential. This means the press, other consumers, and attorneys would be less likely to know the outcomes of cases.

As a result, financial institutions like banks and credit card companies began to put clauses in their terms of service. These clauses mandate that customers forfeit their right to sue the company in court. Instead, they must resolve any disputes in arbitration, such as cases like fraud or discrimination.

Suing a Credit Card Company for Debt Issues

Suing over credit card debt is a different type of lawsuit. Your creditors can sue you for unpaid debts, and you may need to consider filing for bankruptcy in some cases. You can also sue a debt collection agency or credit card issuers for harassment and other legal issues.

Other rules apply for lawsuits involving credit report errors, debt collector issues, faulty credit scores, debt settlement, wage garnishment, and other financial matters. An attorney is the best person to review your case and help you understand who to sue -- it may not always be your credit card company. You can bring a lawsuit in small claims court or bankruptcy court for some debt-related legal issues.

Optional Class Action Lawsuits

The CFPB rule does have some nuances. It prohibits some providers of "consumer financial products and services" from creating a user agreement that prevents lawsuits. Their agreements can't force a consumer into arbitration for disputes. Consumers in these situations are free to seek other legal action.

Some of these companies are also banned from stopping you from:

  • Filing a class action lawsuit
  • Participating in a current class action

In short, some angry customers can sue their credit card companies in court, but this only applies to class action lawsuits.

Why Class Action Lawsuits Are Helpful

This rule is limited to class action lawsuits, i.e. when a large group of people sues over the same issue or injury. But most claims against credit card companies are filed as class actions anyway. Taking on a large credit card corporation alone is unrealistic, and huge companies have teams of lawyers. Class action lawsuits are often the only way to get your money back or stop illegal behavior in a large credit card company.

Questions? Read Your User Agreement and Talk to An Attorney

Consumers who think their credit card company is scamming them may be able to make that claim in court and to a jury. However, you need to check if your contract has mandatory arbitration clauses. In some cases, you can opt out of this clause. Many companies have 30-90 day limits for consumers to opt out.

If you think you've been defrauded or discriminated against by a bank, lender, or credit card company, you can contact an experienced consumer protection attorney today to discuss the case.

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You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

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