Support-Israel credit card co. sues El Al for $$21 million

HAS Advantage – known as the first-ever credit card that enables users to simultaneously support Israel-related charities with their purchases – is suing El Al Israel Airlines for nearly $21 million.

The suit accuses El Al of a series of illegal activities, including breaching multiple agreements with HAS, thus causing it to collapse; unlawfully profiting from HAS; and illegally using HAS ideas and business models that were presented to them for the purposes of a joint venture – and which, the suit alleges, El Al then took for itself.

What makes this lawsuit particularly notable is that it is being backed and partially sponsored by the First Libra Fund, an Israeli organization that finances legal claims. HAS states that the investment committee of the Libra Fund – whose members include retired Israeli judges as well as experts in Israeli law and economics – examined the suit carefully and approved its funding.

The suit was filed in the District Court in Lod, for the sum of $20.8 million. HAS founder Zev Dobuler states that El Al's "brutal behavior intentionally caused a successful business to collapse, the loss of millions of dollars of investment capital, and the loss of tens of millions of dollars of potential future revenue – all of this in violation of specific agreements between the parties."

Contacted by Arutz Sheva, El Al said it will respond to the suit in court, and claimed that HAS owes El Al $2 million. "It appears that HAS finally understood that its marketing success story was not successful," El Al noted cuttingly, "and is now trying to create a different type of success story via legal avenues, which will undoubtedly prove to be a dismal failure." The airline provided no further details.

HAS was established a decade ago by Dobuler and a group of pro-Israel investors, with what Dobuler called "the goal of marketing a unique credit card that would link consumers to Israel on a daily basis by supporting Israeli charitable institutions, purchasing made-in-Israel products, and promoting tourism to Israel."

It ultimately partnered with US Bank and Visa to launch the card, donating a percentage of every purchase to its 24 partner Israeli charities. Total donations over the years – based on its 30,000 customers who spent over $1.5 billion in purchases – totaled over $900,000.

HAS maintains that in 2012, El Al invited it to enter into a joint venture. After nearly a year of negotiations, with an agreement nearing finalization, a third-party entered the picture, and El Al asked HAS to represent it vis-a-vis the third party. These negotiations, too, were going well, HAS says in the lawsuit, when El Al abruptly informed HAS that it wished to change the terms, to the detriment of HAS.

According to HAS, "El Al threatened that if we didn’t agree to the new terms, it would take the [new] deal for itself and leave us out of the deal completely. After weeks of abuse and breaches of agreements by El Al…, El Al moved to finally collapse HAS, hoping for the [third-party] deal to go through on the basis that HAS had gone bankrupt… El Al fulfilled its threat and unilaterally stopped all point transfers from HAS customers [and] notified US Bank that HAS was defaulting on payments… The bank immediately announced the nullification of its contractual arrangements with HAS and absorbed all 30,000 HAS members into a standard US Bank rewards program."

On a personal note, Dobuler says that, "from here, after almost a decade of a perfect payment history, the road to HAS’s destruction and my life work was short."

What is the current status of the 30,000 HAS credit card holders?

"We spent almost $10 million and 10 years acquiring them," Dobuler told Arutz Sheva, "and we lost them overnight. El Al immediately offered to sell points to US Bank, and so within a few months of the end of HAS benefits, cardholders were able to start to redeem again for El Al. Of course, the support for Israeli charities with every purchase has disappeared, and thus our 24 partner Israeli charities also lost a great deal when HAS went out of business."

As of today, Doubler says, "thousands of HAS members have canceled their new US Bank card, thousands have let it become inactive, and thousands are still using it. HAS created the product called a 'support Israel credit card' and created a market for it. That market still exists, but unfortunately is no longer being serviced. Maybe one day it will be again; who knows?"

Source: http://www.israelnationalnews.com/News/News.aspx/203463

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