Note 13 - Loans and Interest Receivable, Net

9 Months Ended

Sep. 30, 2012

Loans and interest receivable represent purchased consumer receivables arising from loans made by a partner chartered financial institution to individual consumers in the U.S. to purchase goods and services through our Bill Me Later merchant network. During the three months ended September 30, 2012 and 2011, we purchased approximately $775 million and $566 million, respectively, in consumer receivables. During the nine months ended September 30, 2012 and 2011, we purchased approximately $2.1 billion and $1.5 billion, respectively, in consumer receivables. Loans and interest receivable are reported at their outstanding principal balances, net of allowances, including unamortized deferred origination costs and estimated collectible interest and fees. We use a consumer's FICO score, among other measures, in evaluating the credit quality of our consumer receivables. A FICO score is a type of credit score that lenders use to assess an applicant's credit risk and whether to extend credit. Individual FICO scores generally are obtained each quarter the consumer has an outstanding loan receivable owned by Bill Me Later. The weighted average consumer FICO score related to our loans and interest receivable balance outstanding at September 30, 2012 was 691 as compared to 692 at December 31, 2011. As of September 30, 2012 and December 31, 2011, approximately 56.6% and 59.3%, respectively, of our loans and interest receivable balance was due from consumers with FICO scores greater than 680, which is generally considered "prime" by the consumer credit industry. As of September 30, 2012, approximately 89% of our loans and interest receivable portfolio was current.

The following table summarizes the activity in the allowance for loans and interest receivable:



	Nine Months Ended September 30,
	2012			2011
	(In millions)
Balance as of January 1	$	59		$	42
Charge-offs	(94		)	(55		)
Recoveries	7			5
Provision	115			59
Balance as of September 30	$	87		$	51