Dennis Alter and the Tragedy of Advanta

Construction of his new house? $80 million. Donation to Temple University? $15 million. Cranking up interest rates on his customers’ credit cards to nearly 40 percent? Shameless.

Like the flicking of a great light switch, Advanta shut down its credit cards with just a few days’ notice. Alter and his executives whittled the company down from a peak of 3,000 employees to a couple of hundred, tasked to collect bills. The company will likely hunker down and gather payments as long as possible, then use the cash to pay off what debt it can, and then — well, no one can say. “They could pull a rabbit out of their hat,” Robertson said. Then he recalled Alter’s ability to save Advanta from previous deaths, reanimating his banking company as a mortgage lender and then a business-card issuer. “Or they can morph into an entirely new business. Which is something these guys have a history of doing.”

In the meantime, the shutdown e-mail gave no hint of what customers using the card — say, while traveling at that moment — should do, assuming they received the e-mail at all. “To be notified of this only a few days in advance,” Feltner wondered aloud on his online journal. “And to be notified by e-mail. Advanta sucks!”

TWO OF THE gentler criticisms of Advanta, recently, came from customers in Florida and Pennsylvania. They contained no curses or threats, but would perhaps have stung Dennis Alter worse than all the others: “God help the poor folks who have large balances they are unable to pay off immediately,” one person wrote to a consumer-complaint website, after Advanta’s rate hike. “This company can create a true hardship for small businesses.”

Alter has always pushed the image of Advanta as a family business. Even as its annual revenues climbed into seven digits, then eight, then nine, and Alter erected his gilded palace on the city’s edge, he would hark back to his father in that spare bedroom in North Philadelphia: licking stamps, mailing articles to the teachers he knew so well. “I can still picture that little room with my dad sitting in it alone at his desk,” he told Smart Business in 2006. “I can picture the small-business person toiling away, trying to make a living doing what they do.”

But as Advanta grew, the son had drifted from his father’s philosophy. Deep understanding of people’s needs evolved into an algorithm designed to predict which sliver of the population could produce the most profit. Empathy gave way to electronic greed.

Like graffiti written with a ghostly hand, a post titled “For Your Father” appeared on another consumer-complaint site this summer: “Dennis Alter, you have abused your Advanta Management position by taking financial advantage of your customers at a time they can least afford it. A 37 percent interest rate is beyond excessive & moral reason. And I am sure you know in your heart, your father Jack would not approve of such abuse,” the customer wrote. “It does not matter how many funds you donate, Mr. Alter, or how many wonderful ‘titles’ are bestowed upon you. … Your company policies have hurt and betrayed hundreds of thousands. I know I have to find a way to forgive you, for the suffering you have caused my family, Mr. Alter. But I do not have to respect you.”

And so the rise and fall of Advanta embodies a final, terrible symmetry: The apotheosis of family business, in the end, destroyed untold numbers of families and their businesses.