Significant Accounting Policies and Consolidated Financial Statement Components (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Loans and Leases Receivable, Troubled Debt Restructuring Policy [Policy Text Block]

Troubled Debt Restructurings.As part of ongoing collection efforts, once an account in our Credit and Other Investments segment is 90 days or more past due, the account is placed on a non-accrual status. Placement on a non-accrual status results in the elimination of the annual percentage rate (“APR”) charged to an account and a cessation of fee billing. Following this adjustment, if a customer demonstrates a willingness and ability to resume making monthly payments and meets certain additional criteria, we will re-age the customer’s account. When we re-age an account, we adjust the status of the account to bring a delinquent account current, but generally do not make any further modifications to the payment terms or amount owed. Once an account is placed on a non-accrual status, it is closed for further purchases. Accounts that are placed on a non-accrual status and thereafter make at least one payment qualify as troubled debt restructurings (“TDRs”).

The following table details by class of receivable, the number and amount of modified loans, including TDRs that have been re-aged, of March 31, 2018 and December 31, 2017:

	As of
	March 31, 2018				December 31, 2017
	Point-of-sale		Direct-to-consumer		Point-of-sale		Direct-to-consumer
Number of accounts on non-accrual status	11,711		8,650		11,432		6,681
Number of accounts on non-accrual status above that have been re-aged	1,135		157		915		80
Amount of receivables on non-accrual status (in thousands)	$	17,388	$	8,778	$	17,169	$	7,067
Amount of receivables on non-accrual status above that have been re-aged (in thousands)	$	2,048	$	171	$	1,570	$	86
Carrying value of receivables on non-accrual status (in thousands)	$	5,431	$	1,365	$	4,247	$	1,173
TDRs - Performing (carrying value, in thousands)*	$	3,563	$	856	$	2,368	$	508
TDRs - Nonperforming (carrying value, in thousands)*	$	1,868	$	509	$	1,879	$	665

*“TDRs - Performing” include accounts that are current on all amounts owed, while “TDRs - Nonperforming” include all accounts with past due amounts owed.

Given that the above TDRs have a high reserve rate prior to modification as TDRs, we do not separately reserve or impair these receivables outside of our general reserve process.

The following table details by class of receivable, the number of accounts and carrying value of loans that completed a modification (including those that were classified as TDRs) within the prior twelve months and subsequently charged off.

	Twelve Months Ended
	March 31, 2018				March 31, 2017
	Point-of-Sale		Direct-to-Consumer		Point-of-Sale	Direct-to-Consumer
Number of accounts	1,881		868		1,617	654
Loan balance at time of charge off (in thousands)	$	2,885	$	1,845	$1,860	$1,906

Prepaid Expenses and Other Assets [Policy Text Block]

Prepaid Expenses and Other Assets

Prepaid expenses and other assets include amounts paid to third parties for marketing and other services as well as amounts owed to us by third parties. Prepaid amounts are expensed as the underlying related services are performed.  Also included are (1) commissions paid associated with our various office leases which we amortize into expense over the lease terms, (2) amounts due from a third party in respect of a servicing agreement totaling $31.6 million as of March 31, 2018, (3) ongoing deferred costs associated with service contracts and (4) investments in consumer finance technology platforms carried at the lower of cost or market valuation.

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses reflect both the billed and unbilled amounts owed at the end of a period for services rendered. Also included within accounts payable and accrued expenses are amounts which may be owed in respect of one of our portfolios.

Basis of Presentation and Use of Estimates

Basis of Presentation and Use of Estimates

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”).

Use of Estimates, Policy [Policy Text Block]

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period. We base these estimates on information available to us as of the date of the financial statements. Actual results could differ materially from these estimates. Certain estimates, such as credit losses, payment rates, costs of funds, discount rates and the yields earned on credit card receivables, significantly affect the reported amount of credit card receivables that we report at fair value and our notes payable associated with structured financings, at fair value; these estimates likewise affect the changes in these amounts reflected within our fees and related income on earning assets line item on our consolidated statements of operations. Additionally, estimates of future credit losses have a significant effect on loans and fees receivable, net, as shown on our consolidated balance sheets, as well as on the provision for losses on loans and fees receivable within our consolidated statements of operations.

We have eliminated all significant intercompany balances and transactions for financial reporting purposes.

Loans and Fees Receivable

Loans and Fees Receivable

Our loans and fees receivable include loans and fees receivable, at fair value and loans and fees receivable, gross.

As of March 31, 2018 and December 31, 2017, the weighted average remaining accretion period for the $36.1 million and $37.0 million of deferred revenue reflected in the consolidated balance sheets was 12 months and 11 months, respectively.

A roll-forward (in millions) of our allowance for uncollectible loans and fees receivable by class of receivable is as follows: 

For the Three Months Ended March 31, 2018	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(18.2	)	$	(2.3	)	$	(42.5	)	$	(63.0	)
Provision for loan losses	(9.0		)	—			(7.0		)	(16.0		)
Charge offs	6.5			0.7			15.1			22.3
Recoveries	(0.1		)	(0.3		)	(1.2		)	(1.6		)
Balance at end of period	$	(20.8	)	$	(1.9	)	$	(35.6	)	$	(58.3	)

As of March 31, 2018	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at end of period individually evaluated for impairment	$	—		$	—		$	(0.2	)	$	(0.2	)
Balance at end of period collectively evaluated for impairment	$	(20.8	)	$	(1.9	)	$	(35.4	)	$	(58.1	)
Loans and fees receivable:
Loans and fees receivable, gross	$	97.8		$	78.4		$	224.5		$	400.7
Loans and fees receivable individually evaluated for impairment	$	—		$	0.1		$	0.2		$	0.3
Loans and fees receivable collectively evaluated for impairment	$	97.8		$	78.3		$	224.3		$	400.4

For the Three Months Ended March 31, 2017	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(1.4	)	$	(2.1	)	$	(39.8	)	$	(43.3	)
Provision for loan losses	(0.4		)	(0.4		)	(9.9		)	(10.7		)
Charge offs	0.4			0.8			14.6			15.8
Recoveries	(0.4		)	(0.3		)	(0.6		)	(1.3		)
Balance at end of period	$	(1.8	)	$	(2.0	)	$	(35.7	)	$	(39.5	)

As of December 31, 2017	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at end of period individually evaluated for impairment	$	—		$	(0.2	)	$	(0.2	)	$	(0.4	)
Balance at end of period collectively evaluated for impairment	$	(18.2	)	$	(2.1	)	$	(42.3	)	$	(62.6	)
Loans and fees receivable:
Loans and fees receivable, gross	$	87.2		$	77.8		$	228.9		$	393.9
Loans and fees receivable individually evaluated for impairment	$	—		$	0.4		$	0.2		$	0.6
Loans and fees receivable collectively evaluated for impairment	$	87.2		$	77.4		$	228.7		$	393.3

An aging of our delinquent loans and fees receivable, gross (in millions) by class of receivable as of March 31, 2018 and December 31, 2017 is as follows:

Balance at March 31, 2018	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	2.8	$	4.3	$	7.1	$	14.2
60-89 days past due	2.7		1.4		5.9		10.0
90 or more days past due	6.9		1.3		14.7		22.9
Delinquent loans and fees receivable, gross	12.4		7.0		27.7		47.1
Current loans and fees receivable, gross	85.4		71.4		196.8		353.6
Total loans and fees receivable, gross	$	97.8	$	78.4	$	224.5	$	400.7
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	1.1	$	—	$	1.1

Balance at December 31, 2017	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	3.2	$	6.4	$	9.0	$	18.6
60-89 days past due	3.3		2.1		7.1		12.5
90 or more days past due	4.9		1.9		15.7		22.5
Delinquent loans and fees receivable, gross	11.4		10.4		31.8		53.6
Current loans and fees receivable, gross	75.8		67.4		197.1		340.3
Total loans and fees receivable, gross	$	87.2	$	77.8	$	228.9	$	393.9
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	1.6	$	—	$	1.6

Income Tax, Policy [Policy Text Block]

Income Taxes

We experienced a negative effective income tax expense rate of 3.1% for the three months ended March 31, 2018, compared to an effective income tax expense rate of 45.9% for the three months ended March 31, 2017. Our negative effective income tax expense rate for the three months ended March 31, 2018, is below the statutory rate principally due to (1) interest we accrued during such period on unpaid federal tax liabilities and uncertain tax positions, (2) additions during such period to valuation allowances against our net federal deferred tax assets associated with our net loss incurred during such period, and (3) foreign tax expense incurred during such period. Our effective income tax expense rate for the three months ended March 31, 2017 was above the statutory rate applicable during such period principally due to interest we accrued during such period on unpaid federal tax liabilities.

As implied above, we report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax benefit or expense line item on our consolidated statements of operations. We likewise report the reversal of income tax-related interest and penalties within such line item to the extent that we resolve our liabilities for uncertain tax positions or unpaid tax liabilities in a manner favorable to our accruals therefor. During both the three months ended March 31, 2018, and 2017, we included $0.2 million of net income tax-related interest and penalties within those periods’ respective income tax expense line items.

In December 2014, we reached a settlement with the IRS concerning the tax treatment of net operating losses we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Our net unpaid income tax assessment associated with that settlement was $7.4 million at March 31, 2018; this amount excludes unpaid interest and penalties on the tax assessment, the accruals for which aggregated $4.3 million at March 31, 2018. Prior to our filing amended return claims that would have eliminated the $7.4 million assessment (and corresponding interest and penalties) under a negotiated provision of the IRS settlement, the IRS filed a lien (as is customarily the case), associated with the assessment. Subsequently, an IRS examination team denied our amended return claims, and we filed a protest with IRS Appeals. Following correspondence and conferences we held with IRS Appeals, we received a settlement offer from IRS Appeals in April 2018 that would reduce our $7.4 million net unpaid income tax assessment referenced above to $3.7 million. We currently are evaluating the settlement offer, and should we accept the offer, (1) our $3.7 million reduction in the unpaid income tax assessment and liability accrued therefor would be reversed into income (along with a commensurate portion of the $4.3 million we have accrued for interest and penalties associated with the $3.7 million settled accrual), and (2) we would expect to pay the remaining accrued income tax, interest and penalties liability to the IRS after the settlement is finalized.

Revenue Recognition, Policy

Income Taxes

We experienced a negative effective income tax expense rate of 3.1% for the three months ended March 31, 2018, compared to an effective income tax expense rate of 45.9% for the three months ended March 31, 2017. Our negative effective income tax expense rate for the three months ended March 31, 2018, is below the statutory rate principally due to (1) interest we accrued during such period on unpaid federal tax liabilities and uncertain tax positions, (2) additions during such period to valuation allowances against our net federal deferred tax assets associated with our net loss incurred during such period, and (3) foreign tax expense incurred during such period. Our effective income tax expense rate for the three months ended March 31, 2017 was above the statutory rate applicable during such period principally due to interest we accrued during such period on unpaid federal tax liabilities.

As implied above, we report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax benefit or expense line item on our consolidated statements of operations. We likewise report the reversal of income tax-related interest and penalties within such line item to the extent that we resolve our liabilities for uncertain tax positions or unpaid tax liabilities in a manner favorable to our accruals therefor. During both the three months ended March 31, 2018, and 2017, we included $0.2 million of net income tax-related interest and penalties within those periods’ respective income tax expense line items.

In December 2014, we reached a settlement with the IRS concerning the tax treatment of net operating losses we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Our net unpaid income tax assessment associated with that settlement was $7.4 million at March 31, 2018; this amount excludes unpaid interest and penalties on the tax assessment, the accruals for which aggregated $4.3 million at March 31, 2018. Prior to our filing amended return claims that would have eliminated the $7.4 million assessment (and corresponding interest and penalties) under a negotiated provision of the IRS settlement, the IRS filed a lien (as is customarily the case), associated with the assessment. Subsequently, an IRS examination team denied our amended return claims, and we filed a protest with IRS Appeals. Following correspondence and conferences we held with IRS Appeals, we received a settlement offer from IRS Appeals in April 2018 that would reduce our $7.4 million net unpaid income tax assessment referenced above to $3.7 million. We currently are evaluating the settlement offer, and should we accept the offer, (1) our $3.7 million reduction in the unpaid income tax assessment and liability accrued therefor would be reversed into income (along with a commensurate portion of the $4.3 million we have accrued for interest and penalties associated with the $3.7 million settled accrual), and (2) we would expect to pay the remaining accrued income tax, interest and penalties liability to the IRS after the settlement is finalized.

Revenue Recognition and Revenue from Contracts with Customers

Consumer Loans, Including Past Due Fees

Consumer loans, including past due fees reflect interest income, including finance charges, and late fees on loans in accordance with the terms of the related customer agreements. Premiums and discounts paid or received associated with a loan are generally deferred and amortized over the average life of the related loans using the effective interest method. Finance charges and fees, net of amounts that we consider uncollectible, are included in loans and fees receivable and revenue when the fees are earned.

Fees and Related Income on Earning Assets

Fees and related income on earning assets primarily include:  (1) fees associated with our credit products, including the receivables underlying our U.S. point-of-sale finance and direct-to-consumer activities, and our historical credit card receivables; (2) changes in the fair value of loans and fees receivable recorded at fair value; (3) changes in fair value of notes payable associated with structured financings recorded at fair value; (4) revenues associated with rent payments on rental merchandise; and (5) gains or losses associated with our investments in securities. 

We assess fees on credit card accounts underlying our credit card receivables according to the terms of the related cardholder agreements and, except for annual membership fees, we recognize these fees as income when they are charged to the customers’ accounts. We accrete annual membership fees associated with our credit card receivables into income on a straight-line basis over the cardholder privilege period. Similarly, fees on our other credit products are recognized when earned, which coincides with the time they are charged to the customer’s account. Fees and related income on earning assets, net of amounts that we consider uncollectible, are included in loans and fees receivable and revenue when the fees are earned.

In periods where applicable, we accrue periodic billed rental amounts (net of allowances for uncollectible billings) into revenues over the rental period to which the billed amounts relate, and we defer recognition in revenues of any advanced customer rental payments until the rental period in which they are properly recognizable under the terms of the contract.

The components (in thousands) of our fees and related income on earning assets are as follows:

	Three months ended March 31,
	2018			2017
Fees on credit products	$	4,905		$	1,096
Changes in fair value of loans and fees receivable recorded at fair value	(18		)	563
Changes in fair value of notes payable associated with structured financings recorded at fair value	1,331			706
Rental revenue	—			148
Other	(4		)	288
Total fees and related income on earning assets	$	6,214		$	2,801

The above changes in the fair value of loans and fees receivable recorded at fair value category exclude the impact of charge offs associated with these receivables which are separately stated in Net recovery of charge off of loans and fees receivable recorded at fair value on our consolidated statements of operations.  See Note 6, “Fair Values of Assets and Liabilities,” for further discussion of these receivables and their effects on our consolidated statements of operations.

Revenue from Contracts with Customers

In the first quarter of 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” under the modified retrospective transition method. We have determined that revenue from contracts with customers would primarily consist of interchange revenues in our Credit and Other Investments segment and other customer-related fees in both our Credit and Other Investments segment and our Auto Finance segment. Revenue from these contracts with customers is included as a component of Other income on our Consolidated Statements of Operations. Components (in thousands) of our revenue from contracts with customers is as follows:

Three months ended March 31, 2018	Credit and Other Investments		Auto Finance		Total
Interchange revenues, net (1)	$	444	$	—	$	444
Service charges and other customer related fees	25		47		72
Total Other income	469		47		516

(1) Interchange revenue is presented net of customer reward expense

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The guidance requires an assessment of credit losses based on expected rather than incurred losses (known as the current expected credit loss model). This generally will result in the recognition of allowances for losses earlier than under current accounting guidance for trade and other receivables, held to maturity debt securities and other instruments. The standard will be adopted on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently in the process of reviewing accounting interpretations, expected data requirements and necessary changes to our loss estimation methods, processes and systems. This standard is expected to result in an increase to our allowance for loan losses given the change to expected losses for the estimated life of the financial asset. The extent of the increase will depend on the asset quality of the portfolio, and economic conditions and forecasts at adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize assets and liabilities for most leases, changing certain aspects of current lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption of ASU 2016-02 will result in the Company recognizing a right-of-use asset and lease liability on the consolidated balance sheet based on the present value of remaining operating lease payments. Net future minimum lease payments totaled $12.2 million as of December 31, 2017. We do not expect the adoption of ASU 2016-02 to have a material impact on our consolidated financial statements due to the limited lease activity we are involved in.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. Additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract is also required. In August 2015, the FASB delayed the effective date by one year and the guidance was effective for annual and interim periods beginning January 1, 2018. Most revenue associated with financial instruments, including interest income, loan origination fees and credit card fees, is outside the scope of the guidance. We adopted this standard as of January 1, 2018 using the modified retrospective method of adoption. Our adoption of this standard did not have a material impact on our consolidated financial statements.

Subsequent Events

Subsequent Events

We evaluate subsequent events that occur after our consolidated balance sheet date but before our consolidated financial statements are issued. There are two types of subsequent events:  (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements; and (2) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.  We have evaluated subsequent events occurring after March 31, 2018, and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements.

Significant Accounting Policies and Consolidated Financial Statement Components

Significant Accounting Policies and Consolidated Financial Statement Components

The following is a summary of significant accounting policies we follow in preparing our consolidated financial statements, as well as a description of significant components of our consolidated financial statements.

Basis of Presentation and Use of Estimates

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period. We base these estimates on information available to us as of the date of the financial statements. Actual results could differ materially from these estimates. Certain estimates, such as credit losses, payment rates, costs of funds, discount rates and the yields earned on credit card receivables, significantly affect the reported amount of credit card receivables that we report at fair value and our notes payable associated with structured financings, at fair value; these estimates likewise affect the changes in these amounts reflected within our fees and related income on earning assets line item on our consolidated statements of operations. Additionally, estimates of future credit losses have a significant effect on loans and fees receivable, net, as shown on our consolidated balance sheets, as well as on the provision for losses on loans and fees receivable within our consolidated statements of operations.

We have eliminated all significant intercompany balances and transactions for financial reporting purposes.

Loans and Fees Receivable

Our loans and fees receivable include loans and fees receivable, at fair value and loans and fees receivable, gross.

As of March 31, 2018 and December 31, 2017, the weighted average remaining accretion period for the $36.1 million and $37.0 million of deferred revenue reflected in the consolidated balance sheets was 12 months and 11 months, respectively.

A roll-forward (in millions) of our allowance for uncollectible loans and fees receivable by class of receivable is as follows: 

For the Three Months Ended March 31, 2018	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(18.2	)	$	(2.3	)	$	(42.5	)	$	(63.0	)
Provision for loan losses	(9.0		)	—			(7.0		)	(16.0		)
Charge offs	6.5			0.7			15.1			22.3
Recoveries	(0.1		)	(0.3		)	(1.2		)	(1.6		)
Balance at end of period	$	(20.8	)	$	(1.9	)	$	(35.6	)	$	(58.3	)

As of March 31, 2018	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at end of period individually evaluated for impairment	$	—		$	—		$	(0.2	)	$	(0.2	)
Balance at end of period collectively evaluated for impairment	$	(20.8	)	$	(1.9	)	$	(35.4	)	$	(58.1	)
Loans and fees receivable:
Loans and fees receivable, gross	$	97.8		$	78.4		$	224.5		$	400.7
Loans and fees receivable individually evaluated for impairment	$	—		$	0.1		$	0.2		$	0.3
Loans and fees receivable collectively evaluated for impairment	$	97.8		$	78.3		$	224.3		$	400.4

For the Three Months Ended March 31, 2017	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at beginning of period	$	(1.4	)	$	(2.1	)	$	(39.8	)	$	(43.3	)
Provision for loan losses	(0.4		)	(0.4		)	(9.9		)	(10.7		)
Charge offs	0.4			0.8			14.6			15.8
Recoveries	(0.4		)	(0.3		)	(0.6		)	(1.3		)
Balance at end of period	$	(1.8	)	$	(2.0	)	$	(35.7	)	$	(39.5	)

As of December 31, 2017	Credit Cards			Auto Finance			Other Unsecured Lending Products			Total
Allowance for uncollectible loans and fees receivable:
Balance at end of period individually evaluated for impairment	$	—		$	(0.2	)	$	(0.2	)	$	(0.4	)
Balance at end of period collectively evaluated for impairment	$	(18.2	)	$	(2.1	)	$	(42.3	)	$	(62.6	)
Loans and fees receivable:
Loans and fees receivable, gross	$	87.2		$	77.8		$	228.9		$	393.9
Loans and fees receivable individually evaluated for impairment	$	—		$	0.4		$	0.2		$	0.6
Loans and fees receivable collectively evaluated for impairment	$	87.2		$	77.4		$	228.7		$	393.3

An aging of our delinquent loans and fees receivable, gross (in millions) by class of receivable as of March 31, 2018 and December 31, 2017 is as follows:

Balance at March 31, 2018	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	2.8	$	4.3	$	7.1	$	14.2
60-89 days past due	2.7		1.4		5.9		10.0
90 or more days past due	6.9		1.3		14.7		22.9
Delinquent loans and fees receivable, gross	12.4		7.0		27.7		47.1
Current loans and fees receivable, gross	85.4		71.4		196.8		353.6
Total loans and fees receivable, gross	$	97.8	$	78.4	$	224.5	$	400.7
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	1.1	$	—	$	1.1

Balance at December 31, 2017	Credit Cards		Auto Finance		Other Unsecured Lending Products		Total
30-59 days past due	$	3.2	$	6.4	$	9.0	$	18.6
60-89 days past due	3.3		2.1		7.1		12.5
90 or more days past due	4.9		1.9		15.7		22.5
Delinquent loans and fees receivable, gross	11.4		10.4		31.8		53.6
Current loans and fees receivable, gross	75.8		67.4		197.1		340.3
Total loans and fees receivable, gross	$	87.2	$	77.8	$	228.9	$	393.9
Balance of loans 90 or more days past due and still accruing interest and fees	$	—	$	1.6	$	—	$	1.6

Troubled Debt Restructurings.As part of ongoing collection efforts, once an account in our Credit and Other Investments segment is 90 days or more past due, the account is placed on a non-accrual status. Placement on a non-accrual status results in the elimination of the annual percentage rate (“APR”) charged to an account and a cessation of fee billing. Following this adjustment, if a customer demonstrates a willingness and ability to resume making monthly payments and meets certain additional criteria, we will re-age the customer’s account. When we re-age an account, we adjust the status of the account to bring a delinquent account current, but generally do not make any further modifications to the payment terms or amount owed. Once an account is placed on a non-accrual status, it is closed for further purchases. Accounts that are placed on a non-accrual status and thereafter make at least one payment qualify as troubled debt restructurings (“TDRs”).

The following table details by class of receivable, the number and amount of modified loans, including TDRs that have been re-aged, of March 31, 2018 and December 31, 2017:

	As of
	March 31, 2018				December 31, 2017
	Point-of-sale		Direct-to-consumer		Point-of-sale		Direct-to-consumer
Number of accounts on non-accrual status	11,711		8,650		11,432		6,681
Number of accounts on non-accrual status above that have been re-aged	1,135		157		915		80
Amount of receivables on non-accrual status (in thousands)	$	17,388	$	8,778	$	17,169	$	7,067
Amount of receivables on non-accrual status above that have been re-aged (in thousands)	$	2,048	$	171	$	1,570	$	86
Carrying value of receivables on non-accrual status (in thousands)	$	5,431	$	1,365	$	4,247	$	1,173
TDRs - Performing (carrying value, in thousands)*	$	3,563	$	856	$	2,368	$	508
TDRs - Nonperforming (carrying value, in thousands)*	$	1,868	$	509	$	1,879	$	665

*“TDRs - Performing” include accounts that are current on all amounts owed, while “TDRs - Nonperforming” include all accounts with past due amounts owed.

Given that the above TDRs have a high reserve rate prior to modification as TDRs, we do not separately reserve or impair these receivables outside of our general reserve process.

The following table details by class of receivable, the number of accounts and carrying value of loans that completed a modification (including those that were classified as TDRs) within the prior twelve months and subsequently charged off.

	Twelve Months Ended
	March 31, 2018				March 31, 2017
	Point-of-Sale		Direct-to-Consumer		Point-of-Sale	Direct-to-Consumer
Number of accounts	1,881		868		1,617	654
Loan balance at time of charge off (in thousands)	$	2,885	$	1,845	$1,860	$1,906

Prepaid Expenses and Other Assets

Prepaid expenses and other assets include amounts paid to third parties for marketing and other services as well as amounts owed to us by third parties. Prepaid amounts are expensed as the underlying related services are performed.  Also included are (1) commissions paid associated with our various office leases which we amortize into expense over the lease terms, (2) amounts due from a third party in respect of a servicing agreement totaling $31.6 million as of March 31, 2018, (3) ongoing deferred costs associated with service contracts and (4) investments in consumer finance technology platforms carried at the lower of cost or market valuation.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses reflect both the billed and unbilled amounts owed at the end of a period for services rendered. Also included within accounts payable and accrued expenses are amounts which may be owed in respect of one of our portfolios.

Income Taxes

We experienced a negative effective income tax expense rate of 3.1% for the three months ended March 31, 2018, compared to an effective income tax expense rate of 45.9% for the three months ended March 31, 2017. Our negative effective income tax expense rate for the three months ended March 31, 2018, is below the statutory rate principally due to (1) interest we accrued during such period on unpaid federal tax liabilities and uncertain tax positions, (2) additions during such period to valuation allowances against our net federal deferred tax assets associated with our net loss incurred during such period, and (3) foreign tax expense incurred during such period. Our effective income tax expense rate for the three months ended March 31, 2017 was above the statutory rate applicable during such period principally due to interest we accrued during such period on unpaid federal tax liabilities.

As implied above, we report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax benefit or expense line item on our consolidated statements of operations. We likewise report the reversal of income tax-related interest and penalties within such line item to the extent that we resolve our liabilities for uncertain tax positions or unpaid tax liabilities in a manner favorable to our accruals therefor. During both the three months ended March 31, 2018, and 2017, we included $0.2 million of net income tax-related interest and penalties within those periods’ respective income tax expense line items.

In December 2014, we reached a settlement with the IRS concerning the tax treatment of net operating losses we incurred in 2007 and 2008 and carried back to obtain refunds of federal income taxes paid in earlier years dating back to 2003. Our net unpaid income tax assessment associated with that settlement was $7.4 million at March 31, 2018; this amount excludes unpaid interest and penalties on the tax assessment, the accruals for which aggregated $4.3 million at March 31, 2018. Prior to our filing amended return claims that would have eliminated the $7.4 million assessment (and corresponding interest and penalties) under a negotiated provision of the IRS settlement, the IRS filed a lien (as is customarily the case), associated with the assessment. Subsequently, an IRS examination team denied our amended return claims, and we filed a protest with IRS Appeals. Following correspondence and conferences we held with IRS Appeals, we received a settlement offer from IRS Appeals in April 2018 that would reduce our $7.4 million net unpaid income tax assessment referenced above to $3.7 million. We currently are evaluating the settlement offer, and should we accept the offer, (1) our $3.7 million reduction in the unpaid income tax assessment and liability accrued therefor would be reversed into income (along with a commensurate portion of the $4.3 million we have accrued for interest and penalties associated with the $3.7 million settled accrual), and (2) we would expect to pay the remaining accrued income tax, interest and penalties liability to the IRS after the settlement is finalized.

Revenue Recognition and Revenue from Contracts with Customers

Consumer Loans, Including Past Due Fees

Consumer loans, including past due fees reflect interest income, including finance charges, and late fees on loans in accordance with the terms of the related customer agreements. Premiums and discounts paid or received associated with a loan are generally deferred and amortized over the average life of the related loans using the effective interest method. Finance charges and fees, net of amounts that we consider uncollectible, are included in loans and fees receivable and revenue when the fees are earned.

Fees and Related Income on Earning Assets

Fees and related income on earning assets primarily include:  (1) fees associated with our credit products, including the receivables underlying our U.S. point-of-sale finance and direct-to-consumer activities, and our historical credit card receivables; (2) changes in the fair value of loans and fees receivable recorded at fair value; (3) changes in fair value of notes payable associated with structured financings recorded at fair value; (4) revenues associated with rent payments on rental merchandise; and (5) gains or losses associated with our investments in securities. 

We assess fees on credit card accounts underlying our credit card receivables according to the terms of the related cardholder agreements and, except for annual membership fees, we recognize these fees as income when they are charged to the customers’ accounts. We accrete annual membership fees associated with our credit card receivables into income on a straight-line basis over the cardholder privilege period. Similarly, fees on our other credit products are recognized when earned, which coincides with the time they are charged to the customer’s account. Fees and related income on earning assets, net of amounts that we consider uncollectible, are included in loans and fees receivable and revenue when the fees are earned.

In periods where applicable, we accrue periodic billed rental amounts (net of allowances for uncollectible billings) into revenues over the rental period to which the billed amounts relate, and we defer recognition in revenues of any advanced customer rental payments until the rental period in which they are properly recognizable under the terms of the contract.

The components (in thousands) of our fees and related income on earning assets are as follows:

	Three months ended March 31,
	2018			2017
Fees on credit products	$	4,905		$	1,096
Changes in fair value of loans and fees receivable recorded at fair value	(18		)	563
Changes in fair value of notes payable associated with structured financings recorded at fair value	1,331			706
Rental revenue	—			148
Other	(4		)	288
Total fees and related income on earning assets	$	6,214		$	2,801

The above changes in the fair value of loans and fees receivable recorded at fair value category exclude the impact of charge offs associated with these receivables which are separately stated in Net recovery of charge off of loans and fees receivable recorded at fair value on our consolidated statements of operations.  See Note 6, “Fair Values of Assets and Liabilities,” for further discussion of these receivables and their effects on our consolidated statements of operations.

Revenue from Contracts with Customers

In the first quarter of 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” under the modified retrospective transition method. We have determined that revenue from contracts with customers would primarily consist of interchange revenues in our Credit and Other Investments segment and other customer-related fees in both our Credit and Other Investments segment and our Auto Finance segment. Revenue from these contracts with customers is included as a component of Other income on our Consolidated Statements of Operations. Components (in thousands) of our revenue from contracts with customers is as follows:

Three months ended March 31, 2018	Credit and Other Investments		Auto Finance		Total
Interchange revenues, net (1)	$	444	$	—	$	444
Service charges and other customer related fees	25		47		72
Total Other income	469		47		516

(1) Interchange revenue is presented net of customer reward expense

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The guidance requires an assessment of credit losses based on expected rather than incurred losses (known as the current expected credit loss model). This generally will result in the recognition of allowances for losses earlier than under current accounting guidance for trade and other receivables, held to maturity debt securities and other instruments. The standard will be adopted on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently in the process of reviewing accounting interpretations, expected data requirements and necessary changes to our loss estimation methods, processes and systems. This standard is expected to result in an increase to our allowance for loan losses given the change to expected losses for the estimated life of the financial asset. The extent of the increase will depend on the asset quality of the portfolio, and economic conditions and forecasts at adoption.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires lessees to recognize assets and liabilities for most leases, changing certain aspects of current lessor accounting, among other things. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The adoption of ASU 2016-02 will result in the Company recognizing a right-of-use asset and lease liability on the consolidated balance sheet based on the present value of remaining operating lease payments. Net future minimum lease payments totaled $12.2 million as of December 31, 2017. We do not expect the adoption of ASU 2016-02 to have a material impact on our consolidated financial statements due to the limited lease activity we are involved in.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. Additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract is also required. In August 2015, the FASB delayed the effective date by one year and the guidance was effective for annual and interim periods beginning January 1, 2018. Most revenue associated with financial instruments, including interest income, loan origination fees and credit card fees, is outside the scope of the guidance. We adopted this standard as of January 1, 2018 using the modified retrospective method of adoption. Our adoption of this standard did not have a material impact on our consolidated financial statements.

Subsequent Events

We evaluate subsequent events that occur after our consolidated balance sheet date but before our consolidated financial statements are issued. There are two types of subsequent events:  (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements; and (2) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.  We have evaluated subsequent events occurring after March 31, 2018, and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements.