To its credit, Prosper has now publicly acknowledged these errors, and its promise to correct them goes beyond the minimum which was required. Not only is it paying interest (at a rate higher than the actual - as opposed to advertised - median ROI for Prosper lenders) . . . .
I think that paying interest at the legal rate was the appropriate move (as I posted here somewhere weeks ago). But this does raise an interesting question. Someone should try to post a blog comment stating that they promptly reinvest all of their incoming payments, so why isn't Prosper giving them the "9.49-12.81%" that Prosper advertises?
On the other hand, I remain unconvinced that it really takes two months or more for Prosper to write the code required to generate the refunds. (Of course, IANAProgrammer.)
In fairness, Prosper said it would be rolling out the fixes, starting mid to late-January (about 1.5-3.5 weeks), then mid-February (about 5 weeks), and then finally end of February (less than 2 months from now). That sounds like the same programmer (or team of programmers) will be handling each fix, one after the other. I think that timeframe is reasonable. What was UNreasonable, is that it took Prosper until now to acknowledge this problem and its intended solution (although Prosper did state it would repay lenders (and I think GL's), it never mentioned the interest before, and it never addressed the GL holdback issue before). It shouldn't have taken Prosper more than a day or two to review Trav's MNH, and post it's intended full solution.
And I hope that, somewhere in all of this, Prosper has awakened to the need to establish tighter controls within its operation. Someone on Prosper's payroll should be responsible for regularly reviewing Prosper's operations (as well as planned FuOperations) to ensure that they conform to the legal agreements (and vice versa); that really shouldn't be my job.
Absolutely correct.
It would be nice to think that today's blog announcement means Prosper has decided to stop waging war on the lending community (or at least realized that its attempts to suppress public criticism have been futile), but the suspension of Epictetus earlier this morning sends the opposite message. And there is still the little matter of Prosper's rejection of my offer to purchase a defaulted loan (MNH #4), which resulted in a loss of about $500 spread among 34 lenders.
As I mentioned in the introduction to MNH #1, there was a time - before Prosper began its attacks on the community - when I gave Prosper the courtesy of a "heads up" before publicly posting about major issues like these, and allowed Prosper a couple weeks to preempt me by announcing that the problem would be fixed. In spite of today's mixed messages, one could argue that this would be a good time to pause the posting of major MNH Reports and see if Prosper is willing to work with the community in a less adversarial manner. (I do have a few updates to post on my blog and some loose ends to tie up on the existing MNH Reports; I would still proceed with those as I find the time.)
Along those lines, one might consider LoanChimp's Warm & Fuzzy criticism of my approach (http://warmnfuzzyprosperblog.blogspot.com/2007/12/response-to-travs-mnh-report-1.html), as well as the recent poll in the Verified Lenders section which showed only plurality (40%) support for a class action lawsuit against Prosper (30% opposed, with plenty of maybes and WGAFs).
What do you think? Should I pause the reports (or resume giving Prosper a "heads-up"), or should I continue posting MNH Reports as I have been doing? Would you want to see an additional show of good faith on Prosper's part before I change course? If so, what?
I do not see any change of attitude by Prosper. They were over a barrel with the missapropriation issues, and they knew it (and they knew that the regulators knew it). So they did little more than was legally necessary. Sure they could have tried to recoup the money erroneously paid, but they probably figured that it wouldn't be worth the hassle. Their mention of you in their blog post was a nice touch, but they were probably hoping that it would buy them some peace from future MNH reports.
IMHO, much more should be required from Prosper before you cease publishing future MNH reports. For starters, Prosper could end its war against .org. For another thing, they could reinstate all of us suspended lenders, and make a public posting that they want to try to improve relations with the lending community. It may be too late, but I don't think it is asking too much for Prosper to try.
