Advanta has been calling and have ignored certified return receipt demand notices requesting proof of signed contract and validation. Advanta has also been told to stop calling and for all communications to be done in writing. They say they can do what they want, that it is a commercial account, I respond the corp is bankrupt and if they are pursuing this personally they then are obligated to follow the consumer protections laws and ignore that too, and keep calling. Calls are recorded and saved, and there are reams of written correspondence that has been saved. For the last two months they keep saying it is going to charge off end of week, but this must be one long week.
Curious how they plan a legal action failing to respond to all written communication...any thoughts to put this to bed?
Advanta Bank Closed by Utah Regulators
Posted by: John Tozzi on March 22, 2010
Advanta Bank Corp., the small business credit card lender that last year settled “unfair and deceptive practices” charges with regulators over rate hikes imposed on small business customers, was seized by Utah banking regulators Friday.
“We just found them to be in an unsafe and unsound condition,” Michael Jones, chief examiner for the Utah Department of Financial Institutions, told me. “They needed additional capital because they were taking significant writedowns and losses on their [small business] credit card portfolio.” Advanta spokeswoman Amy Holderer declined to comment but said parent company Advanta Corp. would issue a statement in an 8-K filing today or tomorrow.
What does this mean for small business borrowers? When Utah regulators seized Advanta bank, the FDIC was named receiver and could not find a buyer for Advanta’s operations. For borrowers who owed money to Advanta Bank, “right now the FDIC is the owner of those loans,” Jones says.
Some Advanta borrowers have already had their debts sold to third-party debt collectors. Advanta’s seizure shouldn’t affect them. It’s unclear whether it will affect those whose debt is now owned by the FDIC.
Advanta issued exclusively small business credit cards. In 2007 the bank was the fifth-largest issuer of small business bank credit cards (which excludes American Express and Discover), with 1.3 million accounts and $14 billion in annual payment volume, according to The Nilson Report, a credit card industry newsletter. Business owners often use credit cards for convenience to cover every day expenses. Many also use them as a source of longer-term financing in lieu of bank loans or credit lines.
Many Advanta borrowers, hit by rate hikes, have been trying to negotiate lower payments and interest rates, and at least one group was seeking class action status for a lawsuit against the bank. The FDIC received 976 complaints about Advanta raising interest rates in the 18 months leading up to Jan. 2009. (Peruse the comments on this post and others for small business owners’ stories about their dealings with Advanta.)
Advanta stopped making new credit card loans and cut off credit to existing customers in May 2009. By that time, the bank had become notorious for repricing interest rates, sometimes to over 30%, on cards opened with 0% APRs or other low teaser rates. In July, Advanta settled with the FDIC over rate hikes and agreed to pay $35 million in restitution, without admitting nor denying wrongdoing. Advanta Bank’s parent company, Spring House (Pa.)-based Advanta Corp., filed bankruptcy under Chapter 11 in November.
In filings with regulators, Advanta reported $205 million in loan charge-offs in 2009. In December, the bank reported $1.62 billion in assets and $1.52 billion in liabilities.
Advanta’s seizure is unlikely to have much effect on the availability of credit for small businesses. Advanta cut off all new lending, including to existing customers, last year. The most significant consequence may be whether those borrowers trying to renegotiate their payments and write down their debts will have an easier time doing so now that the FDIC is their creditor.
I have a call in to the FDIC. We’ll update as we get more information. For Advanta coverage from our archives, click here.
Advanta has been calling and have ignored certified return receipt demand notices requesting proof of signed contract and validation. Advanta has also been told to stop calling and for all communications to be done in writing. They say they can do what they want, that it is a commercial account, I respond the corp is bankrupt and if they are pursuing this personally they then are obligated to follow the consumer protections laws and ignore that too, and keep calling. Calls are recorded and saved, and there are reams of written correspondence that has been saved. For the last two months they keep saying it is going to charge off end of week, but this must be one long week.
Curious how they plan a legal action failing to respond to all written communication...any thoughts to put this to bed?
This "bank" is a loan shark operation veiled in white. My in-law had one of their "small business" accounts and during a down turn in 07, fell behind two payments on a $8,000 balance. They called his home, his office, his mother, his neighbors. The kicker was when one of their "account specialists" got his 9 year old son on the phone and told the child that "daddy owes the bank a lot of money and if he doesn't pay something soon, he's going to be in bad trouble. will you tell your daddy that for us, please?"
My sister and brother-in-law nearly went through the roof when the kid with tears in his eyes relayed the message.
After this episode, I wouldn't waste polluted water on anything or anyone Advanta if it were on fire.