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That agreement addresses charges that theSpring Pa.-based company violated federal trade laws throughu its pricing strategies on business crediyt cards, and in its marketing of cash-back rewards on the cards. Advanta said it did not admit wrongdoing and that it entered theagreementsx “in the interest of expediencu and to avoid litigation.” Advantz said it took a $14 million charge to cover refundws tied to the alleged marketing violations in third-quarteer 2008 and will take a second-quarte 2009 charge to cove refunds over its pricinh strategies, which it said could total $21 Advanta also agreed to a $150,000 In a separate agreement with the FDIC, Advanta’s ability to use cash and pay dividendss has been restricted.
The companyt must submit a plan to remain and submit a plan to terminateits deposit-takinyg operations and deposit insurance once its deposits are repaid in full, a process expected to take a few The second agreement with the FDIC places restrictionsd on Advanta’s use of its cash payment of dividends and transactions that would materially alterr its balance sheet composition and takin of brokered deposits.
Advant said the second order does not in any way restrict it from continuinbg to service itsmanaged credit-card accounts and In an effort to limiyt losses and erosion of its capitall as credit deteriorates, Advanta said in earlh May that its securitization trust will go into earlgy amortization — where the company uses receivablesd from customers to accelerate payment to investor While that protects investors from prolongedd exposure to a pool of receivables whose credit performance has deteriorated, Advantas would have needed an alternative way to fund new purchasews on its customers’ credit cards. So it had to shut down futurew use, effective May 30.
It has sincr referred some customers to AmericanExpreszs Co. Advanta’s stock closed 2 7 percent lower Wednesday at42 cents.
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