Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @ FedPrimeRate.com

Friday, July 03, 2009

Advanta Settles with The FDIC Over Fair Trade Violations

Advanta Business Credit Card
Advanta Business Credit Card
Here's some good news for all those who used to have an Advanta business credit card account. As you may already know, Advanta shut down all business credit cards accounts on May 30, 2009. No account was spared. Small business owners who relied on their Advanta credit cards to buy equipment, inventory, etc. were forced to find new sources of temporary financing in a hurry. This, of course, made lots of cardholders very angry, since business credit cards and lines of credit are not easy to find in the current credit crunch and recessionary economic environment.

To add insult to injury, Advanta also raised the interest rate on many accounts without providing fair warning. This happened with my own Advanta Platinum Businesscard account. Advanta ended my 0% intro APR period early, and without warning. Moreover, I'm still calling Advanta every week, as I'm trying to resolve a problem with an opt-out correspondence. All very vexing stuff.

So here's the good news: Advanta has settled with the Federal Deposit Insurance Corporation (FDIC) over fair trade violations related to business credit card accounts. Bottom line: if Advanta modified your interest rate without fair warning, you may eventually receive a restitution payment.

Here's a clip from Wednesday's press release:

"...Under the settlement, Advanta has agreed to an order to cease and desist, to pay restitution, and to pay a civil money penalty in the amount of $150,000. In addition, restitution of approximately $14 million will be paid to businesses that used Advanta's Cash Back Reward program and $21 million to accountholders whose accounts were repriced. In agreeing to the issuance of the order, Advanta did not admit or deny any liability.

Advanta's 'Cash Back Reward' program advertised a percentage of cash back on certain purchases by business credit card accountholders. Due to the tiered structure of the cash back payments, however, the advertised percentage was not available for all purchases. As a result, it was effectively impossible to earn the stated percentage of cash back reward payments. The FDIC concluded that the Bank's solicitations were likely to mislead a reasonable customer and that the representations were material and that therefore, the Bank engaged in a pattern of deceptive acts or practices in violation of Section 5.

In addition, numerous complaints were filed regarding Advanta's substantial annual percentage rate (APR) increases on the accounts of small business owners and professionals, who had neither exceeded their credit limits nor were delinquent in making payments on their accounts. The FDIC determined that Advanta's rate increases had been implemented in an unfair manner, that Advanta failed to adequately notify accountholders that their APR had increased, the amount of the increase, the reason for the increase, the procedures to opt-out and the consequences of an opt-out. The repricing caused substantial injury to customers, withheld and/or provided inadequate information that could have enabled the customer to reasonably avoid the injury, and provided no benefit to the customer or competition.

'The Advanta settlement demonstrates the FDIC's commitment to having banks take responsibility for ensuring that they do not engage in unfair or deceptive acts or practices in connection with the banking products and services they offer,' said FDIC Board member Thomas J. Curry. 'Any person doing business with an insured depository institution can expect to be treated fairly, and any such entity that engages in unfair or deceptive acts or practices should be aware that the FDIC will pursue such practices with all of the legal authority at our disposal.'..."

OK, so here's an example of one of the worst credit cards ever:



Yup.

I now pose this question to readers: is Advanta the worst business credit card bank ever? As always, your comments are very welcome, and appreciated.

Labels: , , , ,


>  SITEMAP  <





FedPrimeRate.com
Entire Website © 2017 FedPrimeRate.comSM


This website is neither affiliated nor associated with The United States Federal Reserve in any way.
Information in this website is provided for educational purposes only. The owners of this website
make no warranties with respect to any and all content contained within this website. Consult a
financial professional before making important decisions related to any investment or loan
product, including, but not limited to, business loans, personal loans, education loans, first
or second mortgages, credit cards, car loans or any type of insurance.