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[Sense-A]

I have been a member since near when Prosper.com first began.  I probably made about 40 loans.

Mid-2007 i began giving up on prosper as a safe investment choice on my behalf.

Now it looks like the site is shut down.

Whats been going on?  is prosper in litigation?  Was prosper a success or a failure?  how did other lenders make out?

also i need advice on my taxes for deducting bad loans.

any other similar lending sites start up based off prosper?

[ira01]

Welcome.

Prosper turned out to be a big stinking pile of turd, due to its arrogant and incompetent management and its disdain of lenders, its true customers (although Prosper never saw us that way).

For the last couple months Prosper hasn't been able to originate any new loans, because the SEC determined that it had been unlawfully selling unregistered securities (the loans) to lenders.  It is in the process of registering with the SEC, although Prosper 2.0 will look very different.  See http://www.prospers.org/forum/prosper_order_to_cease_and_desist_by_sec-t10903.0.html

Prosper also paid a $1 million fine to settle similar claims with the states.  http://www.prospers.org/forum/nasaa_announces_national_settlement_with_prosper_marketplace_inc-t10991.0.html

Prosper has been sued in a class action lawsuit over the unregistered securities issue.  Two .ORGers are the named plaintiffs -- beerbud1 and Urbi.  Bama used to also be a named plaintiff, but he withdrew.  http://www.prospers.org/forum/attorney_advertising-t10912.0.html

Although a few lenders are doing OK, for most Prosper turned out to be a terrible investment.  It looks like around 40% of all Prosper loans will eventually wind up defaulting.  http://www.prospers.org/forum/prospercom_010109_late_loan_stats_update-t11459.0.html 

The last time I checked (a month or two ago), the median projected ROI for all moderately seasoned Prosper lenders (>20 loans and an average loan age >6 months) was about 2.5%.  Lots of lenders have negative projected ROIs.  And given the macroeconomic conditions, one would expect loan performance to get steadily worse in the future.

There are several threads here about the tax treatment of defaulted loans.  I'll try to find them and link them here.  Basically, loans that were "charged-off" should be reported as non-business bad debt in the short-term capital gain section of your Schedule D.  http://www.prospers.org/forum/got_prosper_1099_damn-t11740.0.html

Lending Club is still in operation, after a similar shut down and reopening following SEC registration.  Zopa shut down.  Fynanz shut down.  There are forums here for them as well.

ETA:  added links.

[Sense-A]

Great reply.  thank you that seems to catch me up a bit.

Congrats to those who sued and won.  Are any other lenders considering collaborating in a class action suit?  I suppose you would have had a more significant amount invested than I for it to be worth the while.

I still think Prosper was a great idea, progressive, fun.  but the stats and tools were cheap and limited.  The collections were managed HORRIBLY.  I believe that lenders should be allowed to bother delinquent borrowers.

[onthefence]

Congrats to those who sued and won.  Are any other lenders considering collaborating in a class action suit?  I suppose you would have had a more significant amount invested than I for it to be worth the while.

The lawsuit has just been filed.  It is expected to become a class action suit so yes, you may join.  Contact information for the lawyer is attached.
http://www.prospers.org/forum/attorney_advertising-t10912.0.html

I don't personally take any position as to if this law firm is the best route to go.  But for all the discussion about alternatives, no one has decided to actually do anything.  So unless you intend to start something yourself.  It's the only game in town.

The suit appears to be smartly narrowly tailored to the fact that Prosper was selling unregistered securities.  This is an item that has already been addressed by the SEC.  In respect to much of the poor behavior of Prosper, I believe that had they been actual registered securities, they would not have pulled such stunts.

[evisha]

By the way onthefence, I had emailed the attorneys for the law suit way back when it was first announced and they never even bothered to contact me.

[Investar]

Ira01 has provided a very nice reading list to catch you up. There's a quick recap, timeline of events as they unfold during the "Quiet" on the SCP Prosper Forums:
http://forums.go4reward.com/index.php?topic=274.0

.. .. and I always recommend Fred93's blog as worthwhile reading.
http://fred93blog.blogspot.com/

[beerbud1]

By the way onthefence, I had emailed the attorneys for the law suit way back when it was first announced and they never even bothered to contact me.

Which Attorney did you contact? When I first sent an e-mail to Phillip Kim, my e-mail went into the spam e-mail folder? I followed up with a phone call. I've spoken with Phillip several times, and he has told me that anyone (Lender) that contacts him, will get a phone update and/or be welcome to join the suit. 

[Sense-A]

I emailed the attorney and volunteered to join even though my losses are not as crucial as others'