High Court Rules on Payday Lenders
Get Breaking News First
JEFFERSON CITY, Mo. (AP) — The Missouri Supreme Court ruled Tuesday that payday lenders can require that customer disputes be settled by arbitration instead of through class-action lawsuits.
Some payday and title lenders include wording in their contracts outlining how they will resolve disputes with customers in arbitration, and some such agreements include wording preventing costumers from filing class-action lawsuits.
In two decisions Tuesday, the high court said it’s not unfair for a payday loan contract to require arbitration to settle disputes. Businesses often prefer arbitration — rather than then relying on a judge or jury — to settle disputes because it can be less costly and time-consuming than litigation.
The decisions come after the U.S. Supreme Court ruled last year that federal laws allowing companies to require arbitration trump contrary state laws. That case did not involve payday lenders, but rather a California couple who had sued AT&T Mobility after they were charged sales tax for cellphones they had been told were free.
In a second case, the Supreme Court voted 7-0 to reverse a lower court decision that had ruled against an arbitration clause because it required customers to waive their right to file a class-action lawsuit. The high court also sent that case back, saying that a trial court should have decided whether the agreement was enforceable under state contracting law.
© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.