Right on Prosper's home page, is an ad directed to borrowers : "Get a personal loan at a great rate." Then it has (in the largest font anywhere on the page by far) "6.58% APR," and in a considerably smaller font above that, "Fixed rates as low as." In another section of the home page, it states "How Prosper loans compare," and it includes a bar graph with one bar labeled Prosper 6.58% APR" and 4 other (twice as long) bars labeled Citibank, Capital One, Chase, and Wells Fargo, at rates between 14.55% and 16.25%.
Although there is a link to a BankRate page from where Prosper apparently got the comparison rates from the banks, nowhere does Prosper state (or include a link to) how it came up with the 6.58% rate. So I took a look at Lendingstats. There have been 8,902 Prosper loans originated so far this year (1/1/08-8/6/08). Of these, a mere 189 (2.1%) have a rate less than or equal to 6.58%. And a number of these were clearly family/friend loans at far-below market rates, not available to regular Prosper borrowers. For example, 3 loans were at 0% interest, and 1 was at 0.01%. 12 of the 189 loans were to HRs, which are obviously friend/family loans.
So how exactly (other than by tossing ethics to the wind) can Prosper advertise rates "as low as 6.58%" in comparing itself to banks, when only 2.1% of all loans originated this year met that criteria (and many of those were special deals not available to the public)? I'm surprised that Prosper didn't advertise rates "as low as 0.00%" (after all, there were 3 such loans this year) -- that would have been equally (dis)honest.
Even if you look at only the AA loans originated this year (1,323), only 11.8% of them had a rate less than or equal to 6.58%. In my humble opinion, advertising a rate that only 1 person in 9 got is fraudulent (and Prosper's actual advertisement, of course, wasn't limited to AA's, so only 2 people in 100 got the rate Prosper advertised). The MEDIAN (half do better, half do worse) rate for AA loans this year is 35% higher -- 8.9%. So an honest advertisement would have been "Rates as low as 8.9% for AA credit rated borrowers (interest rate is the median for all such loans this year)." Not as snappy, but at least it is honest. Obviously, Prosper doesn't care about that, however.
A moderator should feel free to move this thread to the Lobby.