One of the downsides of p2p lending service Prosper.com are high default rates. Results from collection attempts are low.
In an attempt to test alternatives to the existing collection process Prosper in January selected 66 cases of nonpaying borrowers and turned them over to the law firm Hunt & Henriques to pursue these cases in court.
Fred 93, one of the lenders on these loans researched the status of the court cases himself, dissatisfied that Prosper did not inform him on the status, which he says Prosper initially promised to do monthly.
According to Fred93’s findings, Prosper.com so far lost 6 cases and won 1 case.
https://www.p2p-banking.com/services/prosper-loses-several-lawsuits-against-non-payers/
“Prosper loses several lawsuits against non-payers
One of the downsides of p2p lending service Prosper.com are high default rates. Results from collection attempts are low”
Proper led their members to make risky loans by suggesting on their site that those in AA listings had a very small default rate, and they exhibited on their site the past performance of borrowers in the various credit ratings…
You can’t fault them, in my opinion, for the current economic meltdown…
But, you certainly can fault them for giving out too little information about the borrowers, even encouraging them not to give out material and important information that lenders should hear from the borrower before making an informed decision to make a loan…
Sure, Prosper has a responsibility to protect the borrowers privacy, but they also have a responsibility to their lenders…
My experience with Prosper is it’s too much too soon…and totally at the wrong time to bring into this world…somewhat still born and totally wet behind the ears…
Having been business for many years, I learned a long time that selling is easy…but getting your money and making a profit is the reason you open the door in the morning and the reason you are there to run your business….
I will be very surprised if Prosper doesn’t find themselves in a class action suit due to their inability to collect on the outstanding loans, with any competence for lenders to get anything more than penny’s on the dollar…
I for one, will not be lending here, again…
It appears to me that without an adequate arrangement to reasonably collect on these internet loans, that perhaps they should be investigated by the FBI or perhaps the Security Exchange folks or banking regulators to determine if their members have been cheated out of their hard earned money due to Prosper’s poor collection effort vs their posted default rate.