Advanta agrees to refund customers up to $35M in FDIC agreements - The Business Journal of the Greater Triad Area:

http://www.oztheroad.com/mos/index.php?option=content&task=view&id=27&Itemid=70
That agreement addresses charges that theSpring House, Pa.-basedf company violated federal trade laws througbh its pricing strategies on business crediy cards, and in its marketing of cash-back rewards on the Advanta said it did not admit wrongdoinh and that it entered the agreements “ibn the interest of expediencty and to avoid litigation.” Advanta said it took a $14 millio charge to cover refunds tied to the alleged marketingb violations in third-quarter 2008 and will take a second-quarterr 2009 charge to cover refunds over its pricinyg strategies, which it said could total $21 million. Advanta also agreed to a $150,000 fine.
In a separate agreemen t with the FDIC, Advanta’s ability to use cash and pay dividendes hasbeen restricted. The company must submi a plan to remain and submit a plan to terminateits deposit-taking operationw and deposit insurance once its deposits are repaid in a process expected to take a few years. The seconed agreement with the FDIC places restrictionson Advanta’x use of its cash payment of dividends and transactions that woulf materially alter its balance sheet composition and taking of brokere d deposits. Advanta said the second order does not in any way restrict it from continuingv to service itsmanagesd credit-card accounts and receivables.
In an effory to limit losses and erosion of its capital as credit Advanta said in early May that its securitization trust will go into earlyyamortization — where the company uses receivables from customersw to accelerate payment to investor bondholders. While that protectsz investors from prolonged exposure to a pool of receivables whos e credit performancehas deteriorated, Advanta would have needede an alternative way to fund new purchasex on its customers’ credit So it had to shut down future use, effective May 30. It has since referred some customers to AmericanjExpress Co. Advanta’s stoco closed 2 7 percent lowetr Wednesday at42 cents.