Direct response marketers are under assault not only from the Federal Trade Commission (FTC) but also from class action mills that are targeting the advertising of dietary supplements and other consumer products. The financial consequences of an attack from either front can be devastating. Compliant business practices normally are good enough to keep the FTC at bay, but the same can’t always be said for plaintiffs’ lawyers who specialize in the art of the shakedown. Playing the odds, they know that the threat of a class action, even against law-abiding marketers, can be enough to extract a hefty settlement and payday for themselves.
Fortunately, the U.S. Supreme Court, in a series of recent decisions, has given marketers new armor with which to defend themselves preemptively against plaintiffs’ suits: mandatory arbitration of consumer disputes. Last month, in CompuCredit Corporation v. Greenwood, its latest pronouncement on the subject, the Supreme Court barred a class action for violation of the Credit Repair Organization Act (CROA) on the grounds that CompuCredit’s credit card agreement required arbitration, and that CROA did not prohibit arbitration as the sole method of dispute resolution.
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