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[Urbi_et_Orbi]

http://www.finetunedfinances.com/2009/08/lending-club-scam/

Some highlights from this idiot's blog:

When these companies first went into business, they were operating without oversight from the SEC. In 2008, the SEC stepped in and filed an injunction preventing Prosper.com from doing business because the Securities and Exchange Commission contended that Prosper.com was illegally selling unregulated securities. Eventually, Prosper.com and the SEC settled and came to an arrangement where Prosper would securitize their offerings with the SEC and become legitimate. Lending Club has always operated within the realm of SEC oversight.

Make up your mind...

If you’re an investor, there is money to be made in making loans on Prosper and Lending Club. Some have said that prosper and lending club scams their investors because the default rates have been relatively high, but in the last several months, Lending Club and Prosper.com have taken steps to make sure that they only loan to individuals who are likely to repay their loan.

"Can" is not the same as "will" or "intend."

Many investors have made between 9.00% and 14.00% APR back on their money. Investing through Lending Club or Prosper does take a bit more work than simply investing in a mutual fund, but it does offer some good diversification outside of stocks and bonds.

Please back that up with some credible evidence.

There are a few people that have made bad loan decisions that have lost money investing in loans through these companies, but like any investment, there is some risk involved.

 

[ira01]

http://www.finetunedfinances.com/2009/08/lending-club-scam/

Many investors have made between 9.00% and 14.00% APR back on their money. Investing through Lending Club or Prosper does take a bit more work than simply investing in a mutual fund, but it does offer some good diversification outside of stocks and bonds.

Please back that up with some credible evidence.

Depends on what "Many" means.  There are 19,900 Prosper lenders with >20 loans and an average age  >365 days.  A whopping 269 of them have Eric's ROI's >9% -- that's less than 1.4% of those lenders.  Is that "many"? 

There are a few people that have made bad loan decisions that have lost money investing in loans through these companies, but like any investment, there is some risk involved.

Since "many" apparently means 1.4%, I wonder what "a few" means to this guy?  Out of those same 19,900 Prosper lenders, 13,594 have NEGATIVE ROI's -- that's 68.3% of them.     Apparently, this guy needs to read the dictionary more.   

[ira01]

Posted the following comment:

Do you realize that this piece is full of erroneous and misleading information?  For example, contrary to the article, Lending Club was also operating for quite some time without SEC registration, and shut down for months to obtain it like (but before) Prosper. 

More importantly, the claims about lender performance are nothing short of ridiculous.  You claim that "Many investors have made between 9.00% and 14.00% APR back on their money."  In reality, there are 19,900 Prosper lenders with >20 loans and an average age >365 days.  A mere 269 of them have projected ROIs >9.0% -- that is less than 1.4% of such lenders. 

OTOH, you claim that "There are a few people that have made bad loan decisions that have lost money investing in loans through these companies."  In reality, of those same 19,900 Prosper lenders, fully 13,594 of them have NEGATIVE projected ROIs -- that's a whopping 68.3% of them.  Both the mean and median ROIs are solidly negative, as five minutes of research would demonstrate to you.

There are many resources available with the true facts about Prosper.  For a wealth of stats, supplied directly by Prosper, see www.ericscc.com.  For an enormous amount of discussion about Prosper (and to a lesser extent other P2P sites), see www.prospers.org.

[Urbi_et_Orbi]

Good comment.  Let's see if he will approve it for publication.

[TotoMMB]

What is a scam is this clown's write-up. Prosper is not a scam, it's just a poorly run venture.

I think we should tell him (or her) to edit some of those lines highlighted by Urbi. For instance, the article takes on more credibility if we go with:

Many Few investors have made between 9.00% and 14.00% APR back on their money.

And...

There are a few many people that have made bad loan decisions that have lost money investing in loans. 

And personally, I felt my decisions were good. It's the borrowers that have failed to uphold their end of the bargain. If only I were Chase or Citi and could raise the rates of my remaining borrowers to make up for the shortfall. Would be nice to be on the other side of "universal default-ing" someone...

[ira01]

Good comment.  Let's see if he will approve it for publication.

I hate blogs that make it look (to the person leaving the comment) that it has been posted, but not to anyone else.  When I view the blog in Firefox (which I used to make the post), I see the comment with no indication that it is awaiting approval.  In IE, no comment.  Obviously a cookie.

[onthefence]

Public comment on a blog post?
Lobby

[Urbi_et_Orbi]

So far, the not-quite-ready-for-primetime blogger has opted to NOT publish Ira's comment.

[ToySoldier]

For some reason he decided to allow this response to his blog:

[Mtnchick]

For some reason he decided to allow this response to his blog:

 

[ira01]

For some reason he decided to allow this response to his blog:

Great -- so he allows that, but not my comment??

[Urbi_et_Orbi]

THAT is classic!

[DakotahFury]

 

[Urbi_et_Orbi]

Nominate for lobby.

 

[TotoMMB]

Fan-freakin-tastic...