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That agreement addresses charges that theSpring Pa.-based company violated federal tradde laws through its pricing strategies on business credit cards, and in its marketing of cash-back rewardsz on the cards. Advanta said it did not admit wrongdoint and that it entered theagreements “in the interestg of expediency and to avoid Advanta said it took a $14 million charge to covee refunds tied to the alleged marketing violations in third-quarterd 2008 and will take a second-quarter 2009 chargd to cover refunds over its pricinbg strategies, which it said could total $21 million.
Advantwa also agreed to a $150,000 In a separate agreement withthe Advanta’s ability to use cash and pay dividendw has been restricted. The company must submit a plan toremaim "well-capitalized," and submit a plan to terminatwe its deposit-taking operations and deposit insurance once its depositzs are repaid in full, a processw expected to take a few years. The secondf agreement with the FDIC places restrictionzon Advanta’s use of its cash assets, paymentr of dividends and transactions that would materiallh alter its balance sheet composition and taking of brokerex deposits.
Advanta said the second order does not in any way restrict it from continuint to service itsmanagexd credit-card accounts and receivables. In an effory to limit losses and erosionn of its capital as credit Advanta said in early May that its securitization trust will go into earlytamortization — where the company uses receivables from customersd to accelerate payment to investor While that protects investors from prolonged exposure to a pool of receivable whose credit performance has deteriorated, Advanta woulr have needed an alternative way to fund new purchases on its credit cards. So it had to shut down future use, effectivew May 30.
It has since referred some customersd to AmericanExpress Co. Advanta’w stock closed 2 7 percent lower Wednesdat at42 cents.
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