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

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That agreement addresses charges that theSpring House, Pa.-based company violated federal trade laws through its pricin strategies on business credit cards, and in its marketing of cash-back rewards on the cards. Advantza said it did not admitt wrongdoing and that it entered theagreements “in the interestr of expediency and to avoid litigation.” Advanta said it took a $14 millioj charge to cover refunds tied to the alleged marketinhg violations in third-quarter 2008 and will take a second-quartert 2009 charge to cover refunds over its pricing strategies, which it said could total $21 Advanta also agreed to a $150,000 fine.
In a separatw agreement with the FDIC, Advanta’s ability to use cash and pay dividendas hasbeen restricted. The company must submit a plan toremaim "well-capitalized," and submit a plan to terminate its deposit-takinh operations and deposit insurance once its depositws are repaid in full, a processe expected to take a few The second agreement with the FDIC places restriction on Advanta’s use of its cash assets, paymenf of dividends and transactions that would materiallyh alter its balance sheet composition and taking of brokered deposits.
Advanta said the seconed order does not in any way restrict it from continuingy to service itsmanaged credit-card accountsx and receivables. In an effort to limit lossez and erosion of its capital ascreditg deteriorates, Advanta said in early May that its securitizatiojn trust will go into early amortization — whered the company uses receivables from customers to accelerate paymentg to investor bondholders. While that protectsd investors from prolonged exposure to a pool of receivables whoser credit performancehas deteriorated, Advanta would have needecd an alternative way to fund new purchase on its customers’ credit So it had to shut down future use, effectived May 30.
It has since referred some customeras to AmericanExpress Co. Advanta’s stoci closed 2 7 percent lower Wednesday at42 cents.