Shaun gives us another update about his dealings with Prosper.com, and expresses his disappointment with the lending website.
I’ve noticed now that they have added a new feature called “Community Payment” which I’m not sure I like. The concept is simple: if a member of a group is behind on payments, other group members can chip in and make a payment on the overdue loan.
Among other things, his beef is that the new feature lends itself to fraud, and it removes fiscal responsibility from the individual. As I haven’t yet gotten active on Prosper, I can’t say how I really feel on this one. Any other thoughts?
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I’m not sure I really like that idea either. Also I like your notion that it takes away the financial responsibility of the borrower.
If they want to keep this feature, I suggest they make it public how many times a borrow has been bailed out by someone else. That way, if “billy” is looking to borrow $500, but he has a record of having his buddy make his payment, lenders may be able to calculate the risk accordingly.
-Grant
TheCornerOfficeBlog.com
Great idea Grant. Keeping track of the bailouts would be a great feature that would minimize the risk to future lenders IMO.
I do not see why this new feature becomes a disappointment. If anything, this decrease lenders’ risk and therefore is beneficial to the community building.
It certainly will reduce risk. I think the problem is that people can keep defaulting on loans and get bailed out each time. It does seem to decrease the risk to lenders, though.
I see your point, PF.
Maybe they could use it more like a co-signer on a loan. If John Doe borrows $500 from you, and he has Jane Doe cosign the loan, if John can’t pay and Jane Does, it doesn’t affect John’s borrowing capability as both John and Jane are on the hook for the $.
I just think it should affect someone’s borrowing power if they have a history of being bailed out by someone.
-Grant
TheCornerOfficeBlog.com
Maybe Prosper should be given a second chance. They have improved their loan balance system a lot over the last couple of years.