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 Closed
 Mar 23rd, 2010
Got a call from this number today. They left no message and I'm not calling them back. If this is some form of collection agency, they're wasting their time and mine because I don't owe anybody anything.
I owe nothing
 Feb 18th, 2010
Called the office looking for someone who wasn't in. Just left a callback number and "Advanta". Within 2 seconds after hanging up, a call came in on a second office line, same caller ID. I let voicemail pick it up, and they didn't leave a message. A few seconds later, a third call on yet another of our office lines, same caller ID, again didn't leave a voicemail.

Apparently, "the person isn't in, do you want to leave a message" isn't something they understand, and instead call back two more times.
 Sep 24th, 2009
I called Advanta's 800 number for an address change, and just after I hung up, I received a call from 215-385-3300. It was the same person I spoke to when I had just called... he said he had lost the screen with my address and needed me to repeat my street address. (I was concerned that it may have been fishy, but he didn't ask for anything else, and that was the entire call)

So, it's not an 'Advanta Collection' number, but just a number for Advanta in general.
 May 01st, 2009
This is a collection devision from Advanta. My number is a bar, they told me someone that owes them $$$$ called them that they had captured my # and now want to speak to them???? Hey Advanta...Go Kiss Off, good luck in finding that drunk!!
 Jun 24th, 2008
They call several times a day looking for someone I don't know. They call, and don't leave a message if I don't take their call
 Jan 11th, 2007
I get this one 2 to 3 times a week. No message ????? I also get calls from 215-385-3300 W/same ID Could this be the result of whitetrash being in charge of things ?
 Nov 14th, 2006