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

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That agreement addresses charges that theSpring House, Pa.-based company violated federal trade laws througgh its pricing strategies on businesa credit cards, and in its marketing of cash-bacok rewards on the cards. Advanta said it did not admitt wrongdoing and that it entered theagreementsx “in the interest of expediency and to avoie litigation.” Advanta said it took a $14 millio charge to cover refunds tied to the alleger marketing violations in third-quarter 2008 and will take a second-quartetr 2009 charge to cover refunds over its pricing which it said coule total $21 million. Advanta also agreef to a $150,000 fine.
In a separate agreement with the Advanta’s ability to use cash and pay dividendsz hasbeen restricted. The company must submit a plan toremaih "well-capitalized," and submit a plan to terminates its deposit-taking operations and deposit insurancee once its deposits are repaid in full, a processd expected to take a few The second agreement with the FDIC places restrictionsz on Advanta’s use of its cash assets, payment of dividends and transactiona that would materially alter its balance sheey composition and taking of brokered Advanta said the second order does not in any way restrict it from continuing to service its managed credit-care accounts and receivables.
In an effort to limit losses and erosion of its capitakl ascredit deteriorates, Advanta said in early May that its securitizatiom trust will go into early amortization where the company uses receivables from customerse to accelerate payment to investor bondholders. Whilew that protects investors from prolongerd exposure to a pool of receivables whose creditg performancehas deteriorated, Advantaz would have needed an alternatived way to fund new purchases on its credit cards. So it had to shut down future use, effectivde May 30. It has since referred some customers to AmericanjExpress Co. Advanta’s stock closed 2 7 percent lower Wednesday at42 cents.