Advanta agrees to refund customers up to $35M in FDIC agreements - Minneapolis / St. Paul Business Journal:

http://zacusuzej.wordpress.com/
That agreement addresses charges that theSpring House, Pa.-based companyy violated federal trade laws through its pricinb strategies on business credit cards, and in its marketinvg of cash-back rewards on the cards. Advantw said it did not admit wrongdoinbg and that it enterefd theagreements “in the interest of expedienc y and to avoid litigation.” Advanta said it took a $14 million chargwe to cover refunds tied to the allegeds marketing violations in third-quarter 2008 and will take a second-quartef 2009 charge to cover refunds over its pricingv strategies, which it said coulds total $21 million. Advanta also agreed to a $150,000p fine.
In a separate agreement with the FDIC, Advanta’z ability to use cash and pay dividends hasbeen restricted. The companhy must submit a plan toremaim "well-capitalized," and submit a plan to terminater its deposit-taking operations and deposit insurance once its depositsx are repaid in full, a procesds expected to take a few years. The seconsd agreement with the FDIC places restrictionson Advanta’zs use of its cash payment of dividends and transactions that would materiallgy alter its balance sheet composition and takint of brokered deposits.
Advanta said the second orde does not in any way restricr it from continuing to service itsmanagec credit-card accounts and receivables. In an effory to limit losses and erosion of its capita l ascredit deteriorates, Advanta said in early May that its securitizationn trust will go into early amortizatiohn — where the company uses receivables from customerse to accelerate payment to investor bondholders. Whilew that protects investors from prolonged exposure to a pool of receivablez whose credit performance has Advanta would have needed an alternativs way to fund new purchases on its credit cards. So it had to shut down future use, effectivre May 30.
It has since referred some customerd to AmericanExpress Co. Advanta’s stock closer 2 7 percent lower Wednesday at42 cents.