Giving Arbitration Some Credit: The Enforceability of Arbitration Clauses Under the Credit Repair Organizations Act

Abstract

This Student Note addresses the unresolved question of the enforceability of arbitration agreements under the Credit Repair Organizations Act. While the Third and Eleventh Circuits have enforced such agreements, finding that the CROA does not preclude arbitration, the Ninth Circuit has refused to enforce these arbitration clauses, finding that the CROA entitles plaintiffs to a judicial forum. This conflict arises against a backdrop of debate over mandatory arbitration agreements between consumers and businesses. Scholars and legislators alike have argued that such agreements are unjust. A refusal to enforce such agreements, however, would fly in the face of the Supreme Court’s clear mandate to lower courts to enforce arbitration agreements. This Note examines the current circuit split over the enforceability of arbitration agreements under the Credit Repair Organizations Act in the context of both consumer protection law and relevant arbitration jurisprudence. Part I discusses the development of consumer protection law and the enactment of the Credit Repair Organizations Act, and examines the statute in detail. Part II describes the history and procedure of arbitration and examines the development of the Supreme Court’s policy regarding arbitration. Part III then analyzes the circuit split over the enforceability of arbitration agreements under the Credit Repair Organizations Act and the arguments for and against enforcing mandatory consumer arbitration clauses. Part IV advocates for the enforcement of such arbitration agreements, presenting several reasons why consumers will not be harmed by the enforcement of such agreements. Finally, Part IV proposes a simple solution to the problem: the elimination of credit repair organizations.