Commitments and Contingencies

Leases

We have entered into long-term operating lease agreements for office space and capital leases for fixed assets. The minimum fixed commitments related to all non-cancellable leases are as follows:



	Operating Leases		Capital Leases
	(In thousands)
For the remaining nine months ending December 31, 2017	$	2,303	$	416
For the years ending December 31:
2018	3,394		550
2019	1,472		401
2020	109		21
2021	93		7
2022	—		—
Total minimum lease payments	$	7,371	1,395
Less: amount representing interest			(194		)
Present value of minimum lease payments			1,201
Less: current obligation			(450		)
Long-term obligations under capital lease			$	751

During the three months ended March 31, 2017, we did not enter into any new capital lease arrangements. During the three months ended March 31, 2016, we entered into additional capital lease agreements for approximately $137 thousand. We recorded the lease liability at the fair market value of the underlying assets in our condensed consolidated balance sheets. Rental expenses included in general and administrative expenses for the three months ended March 31, 2017 and 2016 were $743 thousand and $712 thousand, respectively.

Legal Proceedings

In the normal course of business, we may become involved in various legal proceedings. Except as stated below, we know of no pending or threatened legal proceedings to which we are or will be a party that, if successful, would result in a material adverse change in our business or financial condition.

In July 2012, the Consumer Financial Protection Bureau (“CFPB”) served a Civil Investigative Demand on Intersections Inc. with respect to its billing practices for identity protection and credit monitoring products sold and enrolled through depositary customers. An action was filed on July 1, 2015 in the United States District Court for the Eastern District of Virginia, Alexandria Division, and a Stipulated Final Judgment and Order (the “Order”) concurrently entered, entitled Consumer Financial Protection Bureau v. Intersections Inc. Without admitting or denying the allegations in the complaint, we agreed to implement a satisfactory compliance plan to comply with the Order and to provide a progress update. We paid a civil monetary penalty of $1.2 million in 2015, and in the year ended December 31, 2016, we paid $63 thousand to 661 customers who had not previously received refunds for periods where the full benefit of the service was not delivered. Intersections also submitted an amended compliance plan to the CFPB, to which it responded with no objections on February 1, 2017.

In January 2013, the Office of the West Virginia Attorney General (“WVAG”) served Intersections Insurance Services Inc. (“IISI”) with a complaint that the WVAG had filed in the Circuit Court of Mason County, West Virginia on October 2, 2012. The complaint alleges violations of West Virginia consumer protection laws based on the marketing of unspecified products. IISI filed a motion for a more definite statement, which was denied by the court in December, 2013. On January 21, 2014, IISI filed an answer to the complaint. An administrative conference occurred on May 26, 2016, for the purpose of development of scheduling order to manage the case through the beginning of a trial. A scheduling order is anticipated to be forthcoming within the three months ending June 30, 2017. On April 21, 2017, the West Virginia Court granted motion of the WVAG to add Intersections Inc. as a defendant in the complaint and issued an order denying our motion for summary judgment.

On March 27, 2017, Jeff Noce, a former employee of our i4c subsidiary, served a Complaint, filed in the Circuit Court of Fairfax County, Virginia against i4c Innovations LLC and Intersections Inc. The Complaint alleges a dispute regarding the employment and termination of Mr. Noce. We believe the allegations in the Complaint are without merit and intend to vigorously defend this matter.

For information regarding our policy for analyzing legal proceedings, please see “Contingent Liabilities” in Note 2. As of March 31, 2017, we do not have any significant liabilities accrued for any of the legal proceedings mentioned above. We believe based on information currently available that the amount, if any, accrued for the above contingencies is adequate. However, legal proceedings are inherently unpredictable and, although we believe that accruals are adequate and we intend to vigorously defend ourselves against such matters, unfavorable resolution could occur, which could have a material effect in our condensed consolidated financial statements, taken as a whole.

Other

We may have indirect tax obligations in state and other jurisdictions. The following table summarizes the non-income business tax liability activity during the three months ended March 31, 2017 and 2016 (in thousands):



	Non-Income Business Tax Liability
	2017			2016
Balance at December 31	$	94		$	3,427
Adjustments to existing liabilities	—			54
Payments	(94		)	(21		)
Balance at March 31	$	—		$	3,460

We continue to correspond with the applicable authorities in an effort toward resolution of our ongoing audits using a variety of settlement options including, but not limited to, voluntary disclosures, negotiation and standard appeals process, and we may adjust the liability at such time. Additionally, we continue to analyze what other obligations, if any, we have to other state taxing authorities. We are currently under audit by a state for indirect taxes. The audit is ongoing and no assessment has been received by the Company, however, we estimate there is more than a remote possibility that the audit may result in a liability. Due to the unique facts and circumstances of this matter, we are unable to provide a reasonable estimate of the liability, if any, that may result from this audit. We believe it is reasonably possible that other states may approach us or that the scope of the taxable base in any state may also increase. However, it is not possible to predict the potential amount of future payments due to the unique facts and circumstances involved.

In the three months ended March 31, 2017, we entered into contracts, pursuant to which we agreed to minimum, non-refundable installment payments totaling approximately $886 thousand, payable in monthly and yearly installments through December 31, 2018. These amounts are expensed on a pro-rata basis and are recorded in cost of revenue and general and administrative expenses in our condensed consolidated statements of operations. For additional information on other minimum, non-refundable contracts, please see Note 19 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K.