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[Xenon481]

From Prosper's Borrower Registration Agreement (as of April 13th, 2011):

Prohibited Activities. You agree that you will not, in connection with any listings, lender commitments, loans or other transactions involving or potentially involving Prosper or WebBank, (i) make any false, misleading or deceptive statements or omissions of material fact; (ii) misrepresent your identity, or describe, present or portray yourself as a person other than yourself; (iii) give to or receive from, or offer or agree to give to or receive from, any Prosper lender or other person any fee, bonus, additional interest, kickback or thing of value of any kind, including in exchange for such person's commitment, recommendation, or offer or agreement to recommend or make a commitment with respect to your listing; (iv) represent yourself to any person as a director, officer or employee of Prosper or WebBank, unless you are such director, officer or employee; or (v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term "postsecondary educational expenses" is defined in Federal Reserve Board Regulation Z, 12 C.F.R. § 226.26(b)(3).

I'm pretty sure that wording has been there for a long time.

What does it mean in relation to Prosper's "gift" to borrowers of paying their 2nd payment back in February

To me, it does sound like the borrowers agreed to receive from Prosper a bonus/kickback/thing-of-value. The part that I'm not understanding the wording of is whether or not borrowers are only not allowed to give/receive such for the listed reasons or if those are just example reasons and they actually aren't allowed to give/receive anything in relation to the loan to/from anybody.

http://www.prospers.org/forum/prosper_turns_5_with_novel_idea_to_attract_new_borrowers-t23320.0.html

[Urbi_et_Orbi]

I don't think I have seen this section before.  Is it new?

(v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school

[112233]

I don't think I have seen this section before.  Is it new?

(v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school

high rates of default? .. plus some people like to dump their school loans into private unsecured loans prior to defaulting etc. I dont know how prevalent the practice is, but I hear about it.

[yankeefan]

without doing any research, I would expect that there are disclosure requirements, or perhaps borrower recourse to the lender if the "education" turns out to be bogus...

So, if you borrow money to attends Yankeefan's pretty good math college, and you don't get anything but a lesson inhow to calculate Prosper returns, then you may be able to get the loan forgiven.

YMMV

[DCS]

From Prosper's Borrower Registration Agreement (as of April 13th, 2011):

Prohibited Activities.
<snip>
(iii) give to or receive from, or offer or agree to give to or receive from, any Prosper lender or other person any fee, bonus, additional interest, kickback or thing of value of any kind, including in exchange for such person's commitment, recommendation, or offer or agreement to recommend or make a commitment with respect to your listing; <snip>

I'm pretty sure that wording has been there for a long time.

What does it mean in relation to Prosper's "gift" to borrowers of paying their 2nd payment back in February

I can confirm that this was part of the borrower registration agreement on Feb 17, the day of the promotion.  Maybe since the money comes from Prosper the company, they don't qualify as "any Prosper lender or other person?"

Although, as I read elsewhere on the forum today, Prosper the company intends to become a Prosper lender.

[Xenon481]

Maybe since the money comes from Prosper the company, they don't qualify as "any Prosper lender or other person?"

AFAIK, as far as contracts go, the term "person" generally includes companies.

Although, as I read elsewhere on the forum today, Prosper the company intends to become a Prosper lender.

That is exactly what brought this to mind.

[ira01]

I don't see how the bolded language would apply.  It prohibits borrowers from receiving something from anyone "in exchange for such person's commitment or recommendation with respect to your listing."  Prosper's second month paid bonus was not in exchange for Prosper's "commitment" (i.e. bid) on the loan, nor was it in exchange for Prosper's recommendation of the loan.

[Xenon481]

I don't see how the bolded language would apply.  It prohibits borrowers from receiving something from anyone "in exchange for such person's commitment or recommendation with respect to your listing."  Prosper's second month paid bonus was not in exchange for Prosper's "commitment" (i.e. bid) on the loan, nor was it in exchange for Prosper's recommendation of the loan.

I guess it is the way that it is worded that is making me not be able to properly understand it. It is the word "including" that doesn't make sense to me. And the comma in front of it too.

For it to read like you say it means, I would expect that section to be worded something like:

[...] or thing of value of any kind, including in exchange for [...]

The comma doesn't make any sense at all. It shouldn't be separating those parts of the sentence.

The word "including" implies to me "including but not limited to [reasons for doing such]". And it is the "but not limited to" part that intrigues me. If the list of reasons was meant to be all inclusive, why wouldn't it just list the reasons instead of implying that there is a bucket of reasons and here are some of the ones included in the bucket?

[xraider]

So is Prosper now going to cancel listings that seek money for post-secondary educational expenses?  

What about this one:
https://www.prosper.com/invest/listing.aspx?listingID=511376

Or this one:  https://www.prosper.com/invest/listing.aspx?listingID=512009

Is Prosper looking at these or will it claim violation of TOS if/when they fund?

[DontDefault]

I don't think I have seen this section before.  Is it new?

(v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school

high rates of default? .. plus some people like to dump their school loans into private unsecured loans prior to defaulting etc. I dont know how prevalent the practice is, but I hear about it.

Yeah, I think it may be because you can write off unsecured loans in bankruptcy, but student loans stay with you forever.  I've heard that if you pay your student loans off using a credit card or similar unsecured debt and promptly declare bankruptcy, the bankruptcy courts will null the transaction and keep the student loan on there.

[Xenon481]

So is Prosper now going to cancel listings that seek money for post-secondary educational expenses?  

What about this one:
https://www.prosper.com/invest/listing.aspx?listingID=511376

Or this one:  https://www.prosper.com/invest/listing.aspx?listingID=512009

Is Prosper looking at these or will it claim violation of TOS if/when they fund?

Prosper has said several times before that the details (title/description) of the listing are not a part of the loan application and so are not considered during verification.

I have reported several listings in the past for outright lies in the title/description and none of them have ever been cancelled by Prosper. mmmmmaker even publicly stated on Prosper's own forums that he was not going to pay the loan back if it funded. Many people reported that listing and yet Prosper still refused to cancel it.

[112233]

I don't think I have seen this section before.  Is it new?

(v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school

high rates of default? .. plus some people like to dump their school loans into private unsecured loans prior to defaulting etc. I dont know how prevalent the practice is, but I hear about it.

Yeah, I think it may be because you can write off unsecured loans in bankruptcy, but student loans stay with you forever.  I've heard that if you pay your student loans off using a credit card or similar unsecured debt and promptly declare bankruptcy, the bankruptcy courts will null the transaction and keep the student loan on there.

somebody (christoofar?) told a story on here about law students paying for law school with 2nd mortgages and promptly defaulting upon graduation

[Xenon481]

(v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term "postsecondary educational expenses" is defined in Federal Reserve Board Regulation Z, 12 C.F.R. § 226.26(b)(3).

Something interesting here.........

12 C.F.R. § 226.26(b) doesn't define anything about "postsecondary educational expenses" and there is no (3) inside of it.

http://law.justia.com/cfr/title12/12-3.0.1.1.7.4.8.2.html

In fact, that part doesn't say anything at all about post-secondary education.

[DCS]

37(b)(3) Postsecondary Educational Expenses
    The HEOA defines ``postsecondary educational expenses'' as any of
the expenses that are listed as part of the cost of attendance of a
student under section 472 of the Higher Education Act of 1965 (20
U.S.C. 1087ll). Proposed Sec.  226.37(b)(3) would adopt this definition
and provide illustrative examples of postsecondary educational
expenses. Examples include tuition and fees, books, supplies,
miscellaneous personal expenses, room and board, and an allowance for
any loan fee, origination fee, or insurance premium charged to a
student or parent for a loan incurred to cover the cost of the
student's attendance. Proposed comment 37(b)(3)-1 would clarify that
the examples in the rule are not exhaustive.

Not sure why it wasn't listed on the site you linked, but Google found it here:
http://www.bankersonline.com/topstory/74fedreg/74FR12464.txt

[Xenon481]

So is Prosper now going to cancel listings that seek money for post-secondary educational expenses?  

What about this one:
https://www.prosper.com/invest/listing.aspx?listingID=511376

Or this one:  https://www.prosper.com/invest/listing.aspx?listingID=512009

Is Prosper looking at these or will it claim violation of TOS if/when they fund?

Also:

https://www.prosper.com/invest/listing.aspx?listingID=512615
https://www.prosper.com/invest/listing.aspx?listingID=512338
https://www.prosper.com/invest/listing.aspx?listingID=499401
https://www.prosper.com/invest/listing.aspx?listingID=512186
https://www.prosper.com/invest/listing.aspx?listingID=512150
https://www.prosper.com/invest/listing.aspx?listingID=511735
https://www.prosper.com/invest/listing.aspx?listingID=510706

These are questionable:
https://www.prosper.com/invest/listing.aspx?listingID=512342
https://www.prosper.com/invest/listing.aspx?listingID=512303 (My financial situation: Jobless American:need survival money until college in autumn.)

I have reported all of those listings (and the two you pointed out) except for the "questionable" ones.

This listing is for post secondary education which is a clear violation of Prosper's Borrower Registration Agreement.

Prohibited Activities. You agree that you will not, in connection with any listings, lender commitments, loans or other transactions involving or potentially involving Prosper or WebBank, [...] (v) use any loan proceeds for postsecondary educational expenses (i.e., tuition, fees, required equipment or supplies, or room and board) at a college/university/vocational school, as the term "postsecondary educational expenses" is defined in Federal Reserve Board Regulation Z, 12 C.F.R. § 226.26(b)(3).