The overall decrease in the number of repurchases is due in large part by the Company's increased efforts in identifying and preventing various fraud schemes. Although we believe our fraud controls have resulted in a lower incidence of fraud in 2010, as compared to prior years, our controls are largely based on experience from past fraud attempts. Accordingly, future repurchase and repayment obligations could vary significantly from our estimates.
Of course Prosper would say that. In the real world, of course, we all know that it is far more likely that the "decrease in the number of repurchases" is due to Prosper doing everything it could to prevent lenders from identifying fraud and making Prosper repurchase loans over its desire not to. Lenders identified a large portion of the fraudulent loans Prosper repurchased, and in a number of cases, Prosper only repurchased them after major shitstorms erupted in the forums over Prosper's failure to repurchase them for extended periods of time, despite being presented with overwhelming evidence of the frauds -- like the infamous Leporello id-theft loan in which Prosper didn't even want to investigate a loan after being spoon-fed reams of information including the name and telephone number of the NYPD detective who was handling the identity fraud case! IIRC, it took a forum shitstorm after close to a YEAR before Prosper finally repurchased that loan.
As the old-timers here know, forum detectives identified MANY fraudulent loans (including the aforementioned Victoria Crawford fraud where the borrower took out almost a dozen loans using fake identities, which eventually led to Prosper filing a lawsuit to freeze the borrowers bank accounts). After being forced to repurchase a number of fraudulent loans, Prosper started making it harder and harder for lenders to ferret out such frauds, by carefully scraping listings of any identifying information (even though Prosper's own official Privacy Policy expressly permitted borrowers to include such information in their listings). Once lenders became unable to discover fraud and force Prosper to repurchase loans, what a surprise --
Prosper essentially stopped repurchasing ANY loans under its so-called "100% identity-theft guarantee." It is laughable for Prosper to now claim that the absence of repurchases shows what a good job it is doing finding fraud on its own. Bwahahaha. Prosper couldn't find its own ass with a flashlight and two hands.