Note 18 - Loans and Interest Receivable, Net

12 Months Ended

Dec. 31, 2012

Loans and Interest Receivable, Net

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 2012 and 2011, we purchased approximately $3.2 billion and $2.3 billion, respectively, in consumer receivables. Loans and interest receivable are reported at their outstanding principal balances, including unamortized deferred origination costs and net of allowance, and include the 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 December 31, 2012 was 689. As of December 31, 2012 and 2011, approximately 55.8% 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 December 31, 2012, approximately 90% of our loans and interest receivable portfolio were current.

The following table summarizes the activity in the allowance for loans and interest receivable for the years ended December 31, 2012 and 2011:



	(In millions)
Balance as of January 1, 2011	$	42
Charge-offs	(78		)
Recoveries	7
Provision	88
Balance as of January 1, 2012	59
Charge-offs	(137		)
Recoveries	9
Provision	170
Balance as of December 31, 2012	$	101