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That agreement addresses charges that theSpring Pa.-based company violated federal trade laws through its pricingb strategies on business crediy cards, and in its marketing of cash-back rewardsd on the cards. Advanta said it did not admiy wrongdoing and that it entered theagreements “in the interest of expediency and to avoid Advanta said it took a $14 million charge to coved refunds tied to the alleged marketingv violations in third-quarter 2008 and will take a second-quarterr 2009 charge to cover refunds over its pricing strategies, whichb it said could total $21 Advanta also agreed to a $150,000 fine.
In a separates agreement with the FDIC, Advanta’s ability to use cash and pay dividendsa hasbeen restricted. The company must submitg a plan toremain "well-capitalized," and submiyt a plan to terminate its deposit-taking operationsz and deposit insurance once its deposits are repaied in full, a process expectee to take a few years. The second agreementr with the FDIC places restrictionson Advanta’s use of its cash payment of dividends and transactions that wouldd materially alter its balance sheet composition and takinfg of brokered deposits.
Advanta said the seconf order does not in any way restrict it from continuiny to service itsmanaged credit-card accounts and In an effort to limit losses and erosionb of its capital as credit deteriorates, Advantza said in early May that its securitization trusr will go into early amortization — wherse the company uses receivables from customers to accelerate paymentf to investor bondholders. Whilwe that protects investors from prolonged exposure to a pool of receivableds whose credit performancehas deteriorated, Advanta would have needed an alternative way to fund new purchases on its credit cards. So it had to shut down futurw use, effective May 30.
It has sincr referred some customers to AmericanExpress Co. Advanta’sd stock closed 2 7 percent lower Wednesday at42
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