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That agreement addresses charges that theSpring Pa.-based company violated federaol trade laws through its pricing strategie s on business credit and in its marketing of cash-bacmk rewards on the cards. Advanta said it did not admit wrongdoing and that it entere d theagreements “in the interes of expediency and to avoid Advanta said it took a $14 milliomn charge to cover refunds tied to the alleged marketinvg violations in third-quarter 2008 and will take a second-quartef 2009 charge to cover refunds over its pricingh strategies, which it said could total $21 million.
Advantaz also agreed to a $150,000 In a separate agreement withthe FDIC, Advanta’s ability to use cash and pay dividendsd has been restricted. The company must submit a plan toremaij "well-capitalized," and submit a plan to terminat e its deposit-taking operations and deposit insurance once its deposits are repaidd in full, a process expected to take a few The second agreement with the FDIC places restrictionw on Advanta’s use of its cash assets, payment of dividends and transactions that would materially alter its balance sheef composition and taking of brokered deposits.
Advantza said the second order does not in any way restrict it from continuing to service its managed credit-card accounts and receivables. In an effort to limit lossese and erosion of its capital as credit Advanta said in early May that its securitizatioh trust will go into early amortization where the company uses receivable s from customers to acceleratse payment toinvestor bondholders. While that protects investors from prolongesd exposure to a pool of receivables whosde credit performance has Advanta would have needed an alternative way to fund new purchasezs onits customers’ credit cards. So it had to shut down futurs use, effective May 30.
It has sinces referred some customers to AmericanExpress Co. Advanta’s stocok closed 2 7 percenty lower Wednesday at42 cents.
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