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That agreement addresses charges that theSpring House, Pa.-based compan y violated federal trade laws through its pricing strategies on business credit cards, and in its marketing of cash-back rewardxs on the cards. Advanta said it did not admit wrongdoing and that it entereds theagreements “in the interesrt of expediency and to avoid litigation.” Advanta said it took a $14 millio charge to cover refunds tied to the alleges marketing violations in third-quarter 2008 and will take a second-quartet 2009 charge to cover refunds over its pricing which it said could total $21 Advanta also agreed to a $150,0000 fine.
In a separate agreementf with the FDIC, Advanta’d ability to use cash and pay dividends has been The company must submit a plan toremainj "well-capitalized," and submit a plan to terminate its deposit-taking operations and deposit insurance once its deposits are repaix in full, a process expected to take a few The second agreement with the FDIC places restrictions on Advanta’a use of its cash assets, payment of dividends and transactions that woulx materially alter its balance sheet compositionh and taking of brokered deposits. Advanta said the second order does not in any way restrictr it from continuing to service itsmanaged credit-carr accounts and receivables.
In an efforft to limit losses and erosion of its capita ascredit deteriorates, Advanta said in early May that its securitization trust will go into earl y amortization — where the company uses receivablea from customers to accelerate payment to investo bondholders. While that protects investors from prolonged exposurs to a pool of receivables whosse credit performancehas deteriorated, Advanta would have needee an alternative way to fund new purchasesz on its customers’ credit cards. So it had to shut down futurw use, effective May 30. It has sincew referred some customers to AmericanExpress Co. Advanta’d stock closed 2 7 percent lower Wednesday at42 cents.
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