New York - Owner Of Credit Card That Supported Israel Takes On El Al In Multimillion Dollar Lawsuit
New York - A former Far Rockaway resident is suing El Al for $20.8 million, charging the Israeli airline with breaching multiple contracts, allegedly resulting in the collapse of a well established credit card company that in its lifetime reportedly donated close to $1 million to charitable institutions in Israel.
Zev Dobuler, who now lives in Israel, launched the HAS Advantage credit card in September, 2005, hoping to find a way to keep Jews worldwide connected with the Jewish homeland.
“We partnered with U.S. Bank and Visa and the cards came with either pictures of the American and Israeli flags together or the Kotel,” Dobuler told VIN News. “Every time you pulled out the credit card you thought about Israel.”
In addition to other bonuses, cardholders were also able to select up to five charities in the HAS network, and with every purchase, HAS and U.S. Bank would make a donation to the chosen organizations. According to Dobuler, the HAS card generated over $900,000 of charitable contributionsin its lifetime to its partners which included A TIME, Zichron Menachem and Shaare Zedek Medical Center.
HAS cardholders earned points for their purchases at over 100 merchants all across the United States and those points were redeemable for rewards including gift cards, Judaica and the ability to buy frequent flyer points in El Al’s Matmid program at attractive prices.
Dobuler said that he and El Al had a positive working relationship and that in 2012 a representative of the Matmid program approached him about partnering in a United States based El Al credit card. According to Dobuler, he had 30,000 customers at the time.
“They said to me, ‘You have already invested $10 million to get where you are, you have 40 employees, 10 years worth of work in the business, we don’t want to compete against you. We want to be 50/50 partners.’”
Dobuler said that joining with El Al would force him to share his profits but would grow his business exponentially, something he felt was a sound business decision. He met with U.S. Bank, negotiated a better deal in order to bring El Al on board and was ready to start the new partnership but that El Al kept renegotiating the deal. Dobuler said that he was ready to move forward again when El Al contacted him and asked him to submit a business proposal to Diner’s Club, which was owned by the United States based Discover, hoping that perhaps Discover could come up with a deal that was even more attractive that the one offered by U.S. Bank.
“I met with them and provided a proposal,” said Dobuler. “El Al didn’t know how to negotiate with a bank. They were not in the credit card business. But I got us an offer that was richer than what U.S. Bank had given us. I thought that everything was great but instead of them saying let’s move on, they told me that they had to negotiate my part of the deal, something we had done months ago, in writing.”
Dobuler admitted to being stunned by the request.
“After two months of negotiating, with a deal that only I could have gotten with my 10 years of experience, El Al totally changed our deal,” charged Dobuler.
Dobuler said he agreed to compromise yet again but that El Al asked for an even greater share of the profits, a demand he refused to meet. After finally walking away from the deal with El Al, Dobuler thought his problems were over, but instead, he said that El Al went to U.S. Bank and told them he owed them $1.8 million and had defaulted on payments, prompting U.S. Bank to cancel their contract with HAS and absorb his customer base of 30,000 credit card holders, totally decimating his business.
Dobuler said that the money El Al was referring to consisted of two separate components. One was in the amount of $740,000, monies that El Al said he owed that Dobuler felt were erroneously billed but had agreed to pay upon completion of the $52 million credit card partnership for the sake of the deal. The other was three months worth of outstanding invoices for Matmid points that had been bought and would have been paid for had El Al not put HAS out of business.
Dobuler is suing El Al for intentionally causing his successful business to collapse, the loss of millions of dollars of investment capital, the loss of tens of millions of dollars of potential future revenue and charging that the airline’s actions were in violation of specific agreements between HAS and El Al and were an extreme breach of good faith.
“I am suing them for the lost profits on the joint deal, for going behind our backs and because all of the information that I gave them was supposed to be used for our joint venture,” said Dobuler, who noted that El Al launched two Israeli credit cards in 2014 based on his expertise.
“Much of what they do is based on everything that I taught them,” remarked Dobuler. “There are components in that credit card that came from documents, plans and data which I sent them on how to run a program so I am suing that for a piece of what they are doing in Israel as well.”
Dobuler’s lawsuit is being backed and partially funded by the First Libra Fund, which finances legal claims that lack funding but appear to have a high chance of success.
“They did three months of due diligence and have made a major investment in this case,” said Dobuler. “This has all been verified and it says volumes about the case.”
Small business like Dobuler’s are typically unable to take on massive companies like El Al because of the tremendous financial outlays involved. Dobuler hopes that his example will give other small companies the courage to take on larger entities who treat them unfairly.
“This is the last thing I wanted to do,” said Dobuler. “I came to them time and time again to settle. They never believed that HAS would turn against them because they are El Al, with 6,000 employees. Because of the Libra Fund we are able to stand toe to toe against El Al for as long as it takes until we get what is owed to us and until we get justice.”
An El Al representative told Arutz Sheva that it will respond to Dobuler’s suit in court and that HAS owes the airline $2 million.
“It appears that HAS finally understood that its marketing success story was not successful and is now trying to create a different type of success story via legal avenues, which will undoubtedly prove to be a dismal failure,” remarked the spokesperson.
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