Advanta agrees to refund customers up to $35M in FDIC agreements - Boston Business Journal:

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That agreement addresses charges that theSpring House, Pa.-bases company violated federal trade laws throughh its pricing strategies on business creditt cards, and in its marketing of cash-back rewardws on the cards. Advanta said it did not admit wrongdoinv and that it entered theagreements “in the interesrt of expediency and to avoid litigation.” Advanta said it took a $14 milliojn charge to cover refunds tied to the allegecd marketing violations in third-quartefr 2008 and will take a second-quartert 2009 charge to cover refunds over its pricing strategies, which it said could totapl $21 million. Advanta also agreed to a $150,000 fine.
In a separate agreement with the FDIC, Advanta’se ability to use cash and pay dividende hasbeen restricted. The companhy must submit a plan toremain "well-capitalized," and submi a plan to terminate its deposit-taking operations and depositr insurance once its deposits are repaid in full, a procesz expected to take a few years. The second agreementg with the FDIC places restrictionson Advanta’s use of its cash payment of dividends and transactions that woulx materially alter its balance sheet composition and taking of brokered Advanta said the second order does not in any way restrict it from continuingh to service its managed credit-card accounta and receivables.
In an effort to limit losses and erosiohn of its capital ascredit deteriorates, Advanta said in early May that its securitization trust will go into earlgy amortization — where the company uses receivablesx from customers to accelerate payment to investo r bondholders. While that protects investors from prolonge exposure to a pool of receivables whose credit performancehas deteriorated, Advanta would have needer an alternative way to fund new purchases on its credit cards. So it had to shut down future use, effective May 30. It has since referred some customer to AmericanExpress Co.
Advanta’s stock closesd 2 7 percent lower Wednesday at42