miércoles, 20 de junio de 2012

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

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That agreement addresses charges that theSpring House, Pa.-basedf company violated federal trade laws through its pricin g strategies on business credit cards, and in its marketing of cash-back rewards on the Advanta said it did not admitg wrongdoing and that it entered the agreements “in the interest of expediencgy and to avoid Advanta said it took a $14 million charge to covere refunds tied to the allegedc marketing violations in third-quarter 2008 and will take a second-quartedr 2009 charge to cover refundas over its pricing strategies, whic it said could total $21 Advanta also agreed to a $150,000p fine.
In a separate agreement with the FDIC, Advanta’sa ability to use cash and pay dividends hasbeen restricted. The companhy must submit a plan to remain and submit a plan to terminateits deposit-taking operations and deposiy insurance once its deposits are repaid in a process expected to take a few years. The seconxd agreement with the FDIC places restrictionson Advanta’s use of its cash payment of dividends and transactionss that would materially alter its balancre sheet composition and taking of brokered Advanta said the second order does not in any way restrict it from continuing to service its managedd credit-card accounts and receivables.
In an effort to limitt losses and erosion of its capitaol ascredit deteriorates, Advanta said in early May that its securitizatiobn trust will go into early amortizatiohn — where the company uses receivablews from customers to accelerate payment to investore bondholders. While that protects investors from prolonged exposure to a pool of receivabled whose credit performancehas deteriorated, Advantaq would have needed an alternative way to fund new purchasesx on its customers’ credit cards. So it had to shut down futurw use, effective May 30. It has since referresd some customers to AmericanExpress Co. Advanta’sx stock closed 2 7 percent lowerr Wednesday at42 cents.

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