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[Fred93]

All this talk about default agencies is a clear indication of how confused the person who did this is.  They shouldn't be doing ANYTHING depending on the default agency.  Everything should depend on the agency associated with each individual bid.  That may be the default agency and may not be the default agency.

Wrong.  They are even more confused than you think.

Under the Lender Registration Agreement, the determining factor is the agency that a lender selected when he registered as a lender, not the agency that he selected when he placed a particular bid.  There is no provision for a lender to change his default agency once the initial selection is made, or to switch agencies each time he places a bid.

Oh my god!  Thanks for pointing that out.  This is another example where the guy they hired to write the legal agreement didn't understand how the system worked, and wrote something they didn't intend.  Well surely their software has never been doing what that agreement says.  All they can do now is plead stupidity and change the agreement.

Nobody at Prosper reads these agreements!

[ira01]

All this talk about default agencies is a clear indication of how confused the person who did this is.  They shouldn't be doing ANYTHING depending on the default agency.  Everything should depend on the agency associated with each individual bid.  That may be the default agency and may not be the default agency.

Wrong.  They are even more confused than you think.

Under the Lender Registration Agreement, the determining factor is the agency that a lender selected when he registered as a lender, not the agency that he selected when he placed a particular bid.  There is no provision for a lender to change his default agency once the initial selection is made, or to switch agencies each time he places a bid.

Oh my god!  Thanks for pointing that out.  This is another example where the guy they hired to write the legal agreement didn't understand how the system worked, and wrote something they didn't intend.  Well surely their software has never been doing what that agreement says.  All they can do now is plead stupidity and change the agreement.

Nobody at Prosper reads these agreements!

This really is pretty amazing (though not for Prosper, whose level of incompetence never ceases to amaze). 

It always seemed to me that Prosper really went out of its way to make sure that the selection of collection agency was the lender's, and not Prosper's (although, of course, lenders' selection was always limited to choosing one out of the two offered).  This was shown in several ways, including the fact that there always was two choices, that lenders had to select a default when registering, that lenders always had the option of selecting the non-default with every bid, as well as by language in various help pages.   I never did figure out exactly why this seemed so important to Prosper, but that was certainly the impression I got.  I assumed it was for some legal or regulatory reason (or maybe just so Prosper could say "YOU picked that crappy agency, not us" if that turned out to be the case).

[Mtnchick]

All this talk about default agencies is a clear indication of how confused the person who did this is.  They shouldn't be doing ANYTHING depending on the default agency.  Everything should depend on the agency associated with each individual bid.  That may be the default agency and may not be the default agency.

Wrong.  They are even more confused than you think.

Under the Lender Registration Agreement, the determining factor is the agency that a lender selected when he registered as a lender, not the agency that he selected when he placed a particular bid.  There is no provision for a lender to change his default agency once the initial selection is made, or to switch agencies each time he places a bid.

Oh my god!  Thanks for pointing that out.  This is another example where the guy they hired to write the legal agreement didn't understand how the system worked, and wrote something they didn't intend.  Well surely their software has never been doing what that agreement says.  All they can do now is plead stupidity and change the agreement.

Nobody at Prosper reads these agreements!

It's merely another case of P-----r changing the legal agreements at whim. To suit themselves, natch.

[traveler505]

As far as I know, the software has always conflicted with the legal agreements on this point, just like several of the other problems I've pointed out in the MNH Reports (charging servicing fees and GL fees on late payments, withholding the first 3 months of GL fees).

[traveler505]

(or maybe just so Prosper could say "YOU picked that crappy agency, not us" if that turned out to be the case).

My guess is that you're close, but the real explanation is a bit more subtle.

Prosper launched the site with the attitude that all it had to do was provide a platform, and let it run itself.  There were no (or grossly inadequate) provisions made for marketing, customer service, borrower verification, credit data, collections, etc. etc.  So I suspect that the voting process was simply consistent with Prosper's initial failure to take responsibility for any aspect of the business other than the platform.   

[ira01]

(or maybe just so Prosper could say "YOU picked that crappy agency, not us" if that turned out to be the case).

My guess is that you're close, but the real explanation is a bit more subtle.

Prosper launched the site with the attitude that all it had to do was provide a platform, and let it run itself.  There were no (or grossly inadequate) provisions made for marketing, customer service, borrower verification, credit data, collections, etc. etc.  So I suspect that the voting process was simply consistent with Prosper's initial failure to take responsibility for any aspect of the business other than the platform.   

Although all of these things are true, I imagine that Prosper (foolishly) believed that collections would be a minor issue (perhaps thinking that the peer-pressure of groups would keep borrowers paying).  So it could easily have just provided one collection agency to take care of those (expectedly few) non-paying borrowers -- after all, finding and "managing" one collection agency is less work for Prosper than having two.  So Prosper must have thought it was important to have two (even though Prosper apparently expected such a low volume of non-paying borrowers that two collection agencies wouldn't have much to do).  Even after one collection agency "fired" Prosper, instead of simply staying with the remaining one Prosper found another to continue making lenders choose one.

[lenderguy]

ira,

I certainly stand to be corrected on this, but IIRC, Prosper had three collection agencies for us to chose from early in the game.

[traveler505]

I found an old post of mine from April 2006:

I just signed up as a lender on Prosper.com, and was given a choice of three collection agencies to be used in case a borrower defaults: AllianceOne, NCI and Penncro Associates.

[ira01]

ira,

I certainly stand to be corrected on this, but IIRC, Prosper had three collection agencies for us to chose from early in the game.

Long before my time, but that's interesting to know.  I think that makes my point even stronger -- why did Prosper feel the need to sign up (and manage) so many collection agencies for lenders to choose from (despite the fact that the choice pretty much was illusory for lenders not funding close to half the loan themselves, since at least for a long time I imagine most lenders had Penncro as their choice). 

[onthefence]

Prosper just sent a new letter out:

**** We recently sent the following note to lenders on whom PennCro was selected as their default agency.  In creating that mailing list, we failed to account for those lenders for whom PennCro was the agency (default or selected) on bids associated with active loans but for whom PennCro was no longer their default agency.  This was a mistake.  We apologize for the oversight.  If you wish to retain PennCro as your agency, please send an email with the subject line of “Retain PennCro” to collectionstesting@prosper.com.

That won't do much good unless you happen to own the majority of a loan.  What are they going to do?  Send your fractional snicker's bar to PennCro for collections and the rest to the other agency?  I don't think so.

[NPX]

FWIW, and not that it will surprise anyone, but I can confirm that P------'s actions are in conflict with its policy as Trav has described it.  When I signed up, I accepted the default collection agency selection of Penncro.  Later on, I switched to Firstsource.  Subsequent to that switch, I was the majority lender on a loan, and that loan does, in fact, show Firstsource as the collection agency.

[lenderguy]

ira,

I certainly stand to be corrected on this, but IIRC, Prosper had three collection agencies for us to chose from early in the game.

Long before my time, but that's interesting to know.  I think that makes my point even stronger -- why did Prosper feel the need to sign up (and manage) so many collection agencies for lenders to choose from (despite the fact that the choice pretty much was illusory for lenders not funding close to half the loan themselves, since at least for a long time I imagine most lenders had Penncro as their choice). 

I'm not entirely sure what you are getting at when you say "illusionary for lenders not funding close to half the loan themselves" but IIRC, Penncro had a cheaper fee than the other two, which is why they got a bulk of the business.  Again, this was awhile ago, so I could be mistaken

[ira01]

ira,

I certainly stand to be corrected on this, but IIRC, Prosper had three collection agencies for us to chose from early in the game.

Long before my time, but that's interesting to know.  I think that makes my point even stronger -- why did Prosper feel the need to sign up (and manage) so many collection agencies for lenders to choose from (despite the fact that the choice pretty much was illusory for lenders not funding close to half the loan themselves, since at least for a long time I imagine most lenders had Penncro as their choice). 

I'm not entirely sure what you are getting at when you say "illusionary for lenders not funding close to half the loan themselves" but IIRC, Penncro had a cheaper fee than the other two, which is why they got a bulk of the business.  Again, this was awhile ago, so I could be mistaken

I think that's right, but whatever the reason, the large majority of lenders had Penncro as their choice.  So regardless of which collection agency any individual lender might want, unless he/she was a very large bidder (around half the loan), chances were overwhelmingly high that Penncro would get the loan.  I'm not saying that there is anything wrong with majority rule in this context, just that Prosper seems to have really wanted to present every lender with a "choice" in collection agency, despite the fact that for most lenders, the choice was Penncro or Penncro.  I've been curious as to why Prosper clearly thought this was important to it.

[cowdog]

ira,

I certainly stand to be corrected on this, but IIRC, Prosper had three collection agencies for us to chose from early in the game.

Long before my time, but that's interesting to know.  I think that makes my point even stronger -- why did Prosper feel the need to sign up (and manage) so many collection agencies for lenders to choose from (despite the fact that the choice pretty much was illusory for lenders not funding close to half the loan themselves, since at least for a long time I imagine most lenders had Penncro as their choice). 

I'm not entirely sure what you are getting at when you say "illusionary for lenders not funding close to half the loan themselves" but IIRC, Penncro had a cheaper fee than the other two, which is why they got a bulk of the business.  Again, this was awhile ago, so I could be mistaken

I think that's right, but whatever the reason, the large majority of lenders had Penncro as their choice.  So regardless of which collection agency any individual lender might want, unless he/she was a very large bidder (around half the loan), chances were overwhelmingly high that Penncro would get the loan.  I'm not saying that there is anything wrong with majority rule in this context, just that Prosper seems to have really wanted to present every lender with a "choice" in collection agency, despite the fact that for most lenders, the choice was Penncro or Penncro.  I've been curious as to why Prosper clearly thought this was important to it.

Their junior programmers couldn't figure out a way to make the agency choice rotate, and so Penncro was the default choice that stayed unless it was manually changed by the lender.