Genevieve Hanft


In today’s economy, the effects of a bad credit report are devastating to consumers. Individuals with poor credit history are often crippled in their ability to purchase even the smallest item, and consequently turn for help to credit repair organizations advertising services that cure bad credit. Frequently, however, these organizations merely accept high fees from customers already in dire financial straits, without improving their financial standing. To combat these predatory practices, Congress passed the Credit Repair Organizations Act (CROA), which imposes several requirements on credit repair organizations. One such provision mandates that credit repair organizations give a form to each consumer that clearly explains their specific rights before any contract is signed. This required disclosure form notifies consumers that they have “the right to sue” a credit repair organization that violates any provision of the CROA. References to this right, however, appear nowhere else in the statute. Many credit repair organizations include mandatory arbitration clauses in their contracts with consumers. As a result, consumers who have received a form notifying them of a “right to sue” may be told, by both companies and courts, that they may not seek redress in a court of law. Circuit courts have split on the enforceability of these arbitration agreements. In the context of both consumer protection law and recent arbitration jurisprudence, this Note examines the purported collision between the CROA and the longstanding Supreme Court policy in favor of enforcing arbitration agreements pursuant to the Federal Arbitration Act. After examining the passage of the CROA and the history of arbitration as a mechanism for dispute resolution, this Note analyzes the divergent approaches taken by the U.S. Courts of Appeals for the Third, Ninth, and Eleventh Circuits in addressing this conflict. Ultimately, this Note recommends that courts enforce these arbitration clauses in order to preserve the viability of arbitration as an effective method of dispute resolution.

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