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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:


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.

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Anonymous Anonymous said...

I had an Advanta CC for my photography business, and always paid on time-over the limit. I signed on for 7.99%, and had it for 7 or 8 months when, in September of 08 I realized they were charging me 25.99%!!! Never late, FICO scores near 750 at all three agencies-when I called, they told me that they felt I was a risk (?) and they had the right to raise it to whatever they wanted. I, like others, received NO opt-out notification, and they changed my rate on July 1, 2008. Furious, I went to the bank and withdrew the full amount due, and paid it on line that day through my personal checking account. It was only a few thousand dollars, but cash flow was rather difficult over the slow winter months as I tried to put that money back in my savings account. I cut back on advertising, and feel that this year has been slower than usual as a result-I have been doing this for 24 years, so I have been existing on word of mouth and belt tightening.

I hope that Advanta and specifically Dennis Alter (CEO) rot in hell for what their greed has done to thousands of small business owners.

Tuesday, July 07, 2009 11:57:00 AM  
Anonymous Advanta Business Credit Card said...

> I had an Advanta CC for my
> photography business...

I'm sorry to read about your experience with Advanta.

Have you been able to open a new business credit card account with another bank?

Wednesday, July 08, 2009 9:24:00 AM  
Anonymous Gary said...

Hands down, without a doubt, tha absolute worse. I had a 0% intro rate, My wife decides to pay online, in doing so she accidentally reverts the last two digits on the account. So a couple weeks later I see Advanta was sent the monthly payment, the following month I see on my bank statement, that Advanta sent the money back to the bank. I open my next month statement from Advanta, and BAM, the big surprise. I was considered late, and the best part was they took the rate right to 34.99%. (I think you can borrow money from shady guys cheaper than that.) I called Advanta immediately, told them what happened, HAHAHA, sorry chumly , I was late with my payment, end of the intro rate. I send all documentation showing what had happened accidentally. Response was from the Vice President was Sorry Sir

Sunday, September 13, 2009 12:18:00 PM  
Anonymous Debt Help said...

> she accidentally reverts the
> last two digits on the account...

It's unfortunate that your wife made an error with your account number. Can't blame the bank for such errors.

Sunday, September 13, 2009 2:12:00 PM  
Anonymous Anonymous said...

To answer the question is ADVANTA the worst Credit Card...
CHASE & BANK OF AMERICA are probably even more unsrupolis with their SNEAKY LYING DECEIVING TACTICS.
I have made a complaint with the agency who governs the NATL BANKs.
I have been advised that it can take up to 60 days for action/reply etc. etc.
Watch your monthly statements/invoices & besure to check for any "increases" in your APR & "credit line decrease".
ADVANTA initially created a major headache with their illegal tactics. But with the FDIC stepping in very quickly ADVANTA got back their deserved punishment!
FDIC is very efficient.
I just hope the OCC will be as efficient in bringing the NATL BANKs to their knees & hang them by their you know what.

Tuesday, September 29, 2009 4:07:00 AM  
Anonymous Anonymous said...

i have never evr defaulted on my monthly payments but all of a sudden, advanta raised my rate from the original 7.99 percent to twelve and then to 14 then to 34.99 percent saying that the credit reporting agency had deemed me an unacceptable risk........i had never defaiulted and make lots of money.......i called the credit agency responsible and they hung up the phone on me and refused to cooperate.......end of i pay the higher interest and am apalled at the manner in which they arrived at this new rate......what can i do?.........richard martin

Thursday, October 01, 2009 3:58:00 PM  
Anonymous Business Credit Cards said...

> what can i do?

1) Since you make a good income, you should consider paying it off

2) You can transfer the balance to another business credit card that has more favorable terms. Business credit card are making a comeback, so you will see more and more transfer options as we move into the winter and the recession eases.

You should be aware that if you transfer your balance to a consumer credit card instead of a business card, your FICO credit score will likely take a hit. The higher the transferred balance, the bigger the ding will be. But if you are paying an exorbitant amount in interest with your Advanta card then it still may be worth it to the transfer to a consumer card.

If I was in your position, I would try to transfer to a business card(s) before trying to transfer to a consumer card.

Friday, October 02, 2009 5:50:00 AM  
Anonymous Anonymous said...

I just got the "restitution" check from Advanta. What does this FDIC "cease and desist" order do? I am still being charged 34.99% on my outstanding balance with Advanta. Also, Chase Bank is another one that raised my 4.99% to 29.99%, lowers my credit limit and now charges me an "overcredit fee"! Talk about kicking a guy when they're already down! I'm stressing; but I'll pull through! When I do pay off all my balances, never will I do business with credit card issuers!!! CASH IS KING!!!

Wednesday, October 07, 2009 7:12:00 PM  
Anonymous Business Credit Cards said...

> I just got the "restitution"
> check from Advanta...

That's cool. I didn't think cardholders would get a check in the mail so soon. How much did you get?

And yes: cash IS king, and always will be.

Wednesday, October 07, 2009 10:55:00 PM  
Anonymous Anonymous said...

I tried to reach Advanta over 10 times via mail and 5 times over the phone only to be told 'we don't answer calls of this nature since our credit card is closed. We cannot revert your rate back to 7.99%'.

The problem was I was NOT notified about a rate increase and this has cost me over $3,000 in interest over the past year. A $275 check does not cover it.

I will not stop my action against Advanta until my interest rate is reverted back and my stoled interest is paid back!

Tuesday, January 19, 2010 2:21:00 AM  
Anonymous Advanta Business Credit Cards said...

> We cannot revert your rate
> back to 7.99%'...

Did you ever receive a letter from Advanta about opting out of a rate increase?

Tuesday, January 19, 2010 2:36:00 AM  
Anonymous keerthi143 said...

adavanta credit cards are one of the worst credit card i have used..BOA credit cards are better for business than advanta,
ADVANTA initially created a major headache with their illegal tactics. But with the FDIC stepping in very quickly ADVANTA got back their deserved punishment!

Saturday, August 07, 2010 9:34:00 AM  
Anonymous Anonymous said...

I wish the Bill and Melinda gates foundation would fund a microloan card that people could replenish the balance of a loan in it after reviewing your quarterly statements and stuff. That would be a visionary business credit card.

Friday, September 17, 2010 8:02:00 PM  
Anonymous Anonymous said...

Any credit terms over 20 per cent are odious. These FDIC moves come way too late. I wonder how many complaints it took to get things going.

Friday, September 17, 2010 8:14:00 PM  

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