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

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That agreement addresses charges that theSpringf House, Pa.-based company violated federao trade laws through its pricinf strategies on business credit cards, and in its marketing of cash-back rewardsz on the cards. Advanta said it did not admitf wrongdoing and that it entered theagreementss “in the interest of expediency and to avoisd litigation.” Advanta said it took a $14 millionj charge to cover refunds tied to the allegef marketing violations in third-quarter 2008 and will take a second-quarterr 2009 charge to cover refunds over its pricin strategies, which it said could total $21 Advanta also agreed to a $150,0009 fine.
In a separate agreement with the Advanta’s ability to use cash and pay dividend hasbeen restricted. The compang must submit a plan to remain and submit a plan to terminateits deposit-taking operations and deposit insurance once its deposits are repaid in a process expected to take a few years. The seconcd agreement with the FDIC placese restrictionson Advanta’s use of its cash assets, paymen of dividends and transactions that would materiall y alter its balance sheet composition and takingb of brokered deposits.
Advanta said the secondx order does not in any way restrict it from continuing to service itsmanaged credit-card accounts and In an effort to limit losses and erosiom of its capital as credit deteriorates, Advantaw said in early May that its securitization trusty will go into early amortizationn — where the company uses receivables from customeres to accelerate payment to investor bondholders. While that protectes investors from prolonged exposure to a pool of receivablez whose credit performancehas deteriorated, Advant a would have needed an alternative way to fund new purchasesa on its customers’ credit cards. So it had to shut down future use, effective May 30.
It has since referred some customer s to AmericanExpress Co. Advanta’s stock closed 2 7 percentg lower Wednesday at42