Meta Financial Group Inc.'s shares fell more than 30% Wednesday on news that the Office of Thrift Supervision has ordered its MetaBank subsidiary, a major issuer of prepaid debit cards, to scrap its iAdvance credit product after determining the bank misrepresented the product.
Meta, of Storm Lake, Iowa, disclosed in a Securities and Exchange Commission filing Tuesday that the OTS said it "engaged in unfair or deceptive acts or practices" in operating the program, which offers prepaid card users small lines of credit.
The OTS required Meta to stop offering the program by Wednesday. A message on Meta's home page for iAdvance customers said the OTS had ordered it to end the program but customers are still required to repay outstanding balances.
Under a supervisory directive the OTS issued, MetaBank must obtain prior written approval to enter new business agreements, originate income tax anticipation loans or offer an income tax refund transfer processing service during the 2011 tax season.
The company said it expects that discontinuing the iAdvance program and the potential discontinuance of its tax-related programs will wipe out a "substantial portion" of its Meta Payment Systems division's gross profit.
Meta said it plans to continue servicing existing business agreements and is working with the OTS to "correct" portions of its operations.
Meta's shares closed down 33% at $22.25 Wednesday.
