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Author Topic: Q & A with Doug Fuller, Prosper’s Vice President of Operations  (Read 37605 times)

traveler505

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #15 on: October 03, 2007, 02:42:23 am »

He's still not listed on the "management" page.  I'm starting to suspect that they can only update that page as part of a full four-hour site upgrade (don't ask me why), so I'd guess he started after September 12.  (Either that or they forgot about him when they did that upgrade.)  The newsletter announcement was the 20th.
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112233

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #16 on: October 03, 2007, 07:12:21 am »

This is what he said he will do about Prosper collections as far as I can tell:
  • widen the time span of collection calls
  • stop calling disconnected numbers
  • call more often
  • tell callers they're hurting "average joes"
  • scare late borrowers with lawsuits
  • find a different collection agency or bring the operation in-house if the above items aren't accomplished

Did I miss anything?

Mtnchick

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #17 on: October 03, 2007, 07:35:58 am »

This is what he said he will do about Prosper collections as far as I can tell:
  • widen the time span of collection calls
  • stop calling disconnected numbers
  • call more often
  • tell callers they're hurting "average joes"
  • scare late borrowers with lawsuits
  • find a different collection agency or bring the operation in-house if the above items aren't accomplished

Did I miss anything?

All that can be wrapped into "Use common sense". And like others (and I) have stated, nothing he's doing is anything at least 50 of us have been suggesting. Yes, I'll be glad if he follows through with OUR suggestions and gets more money but if I were one of the VC guys, I'd be pissed off my money was being spent on a salary when lenders have been giving the advice for free.

Next thing they'll do is hire someone at 6 figures to do "Deep Googling" ;)

ETA - "...nothing he's doing is anything at least 50 of us HAVEN'T been suggesting" ;)
« Last Edit: October 03, 2007, 08:19:31 am by Mtnchick »
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bamalucky

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #18 on: October 03, 2007, 08:14:15 am »

Some of you seem to be missing where Doug even if 99% worthless is still a 1% improvement..Give the guy a chance.It's not like he can do any harm.

I for one would also welcome them hiring a deep googler.
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112233

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #19 on: October 03, 2007, 08:14:16 am »

This is what he said he will do about Prosper collections as far as I can tell:
  • widen the time span of collection calls
  • stop calling disconnected numbers
  • call more often
  • tell callers they're hurting "average joes"
  • scare late borrowers with lawsuits
  • find a different collection agency or bring the operation in-house if the above items aren't accomplished

Did I miss anything?

All that can be wrapped into "Use common sense". And like others (and I) have stated, nothing he's doing is anything at least 50 of us have been suggesting. Yes, I'll be glad if he follows through with OUR suggestions and gets more money but if I were one of the VC guys, I'd be pissed off my money was being spent on a salary when lenders have been giving the advice for free.

Next thing they'll do is hire someone at 6 figures to do "Deep Googling" ;)

Yeah, these are pretty straight forward, common sense things. No PhD required. I had to stop a moment and laugh when I read this question from Shira:

(in response to Doug stating the time span of calls should be widened, and disconnected numbers should not be called):
Quote from: Shira
Q: Can you do the same thing with Prosper’s collections calls?
Is there rocket science involved here or something?

Mtnchick

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #20 on: October 03, 2007, 08:20:11 am »

I for one would also welcome them hiring a deep googler.

I think it would be excellent - it would get rid of a lot of bad loans and would allow those who are doing it for free to do their real jobs ;)
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112233

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #21 on: October 03, 2007, 08:45:26 am »

imagine what could be googled with PII on everyone (from their internal systems)?

raalcala

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #22 on: October 03, 2007, 08:55:00 am »


(in response to Doug stating the time span of calls should be widened, and disconnected numbers should not be called):
Quote from: Shira
Q: Can you do the same thing with Prosper’s collections calls?
Is there rocket science involved here or something?



No, but a PhD is required.  :D
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Urbi_et_Orbi

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #23 on: October 03, 2007, 06:51:31 pm »

Shira just unlocked the thread - and has invited questions.

http://forums.prosper.com/index.php?showtopic=31159&hl=

bamalucky

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #24 on: October 03, 2007, 06:54:36 pm »

Shira needs to be like me on the Zopa board..They read & approve any message i type before it's posted
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Urbi_et_Orbi

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #25 on: October 03, 2007, 06:56:25 pm »

I'm guessing a good chunk of the Prosper staff quietly shakes their heads and cringe when they read some of the stuff she posts.

In this case, sanity may have prevailed.

Urbi_et_Orbi

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #26 on: October 08, 2007, 07:10:09 pm »

Shira posted.  Interesting stuff.

http://forums.prosper.com/index.php?showtopic=31159&st=0&#entry387161

Quote
Hello,

In response to the numerous follow-up questions to Doug Fuller’s Q & A, we culled what appeared to be the “Top 20” questions from this forum and this one. Some questions have been combined by similar theme, such as transparency and increased information sharing. Hopefully, we captured the gist of most of your questions below.

Thanks,
Shira


1. Would you be willing to list what you have seen wrong with Prosper collections at this point and if said weak areas will be corrected?

The two biggest weaknesses in our collections process have been “Agency Management” and the lack of legal (court) collection actions. The problem with Agency Management stems from the realities of a start-up. People are wearing lots of different hats to get the job done. Prior to my arrival, the person who ran the agency relationship is really a “credit and underwriting” expert with little collections experience.

As to the lack of a legal option, there are a number of novel challenges in implementing a legal option for Prosper, but it is clear that we need one and so I’m working through those issues as quickly as I can. I’m going to talk about the legal option in a later section of this Q & A.


2. When you talk about transparency, how transparent are you willing to go? When will the collections process be more transparent? How will we know when the collections process is more transparent? (This is not a trick question, or a joke. While your stated goal is to make collections more transparent, what I've seen in my nine months as a lender has been a move away from transparency. Will you or Prosper post changes in collection procedures, and what they mean in terms of lenders' bottom lines?)

As the first person-to-person credit marketplace, Prosper has to set up a system that is collection-aggressive, but is in compliance with the Fair Debt Collection Practices Act, which protects delinquent borrowers from things like publishing “deadbeat lists.” Collection transparency is more appropriate using aggregate information as opposed to loan level info.

When I talk about transparency, I mean that I am going to be very upfront with the lender community about the steps I am taking to improve collections, the reasons for taking those steps, when the change will be implemented, and when I expect to see results. I also intend to create additional reporting to help people understand what’s happening with collections – the information currently on the site is all “snapshot” data. I also want to create monthly summaries so it is possible to look back and see how many accounts were in collections at the end of August vs. the end of September, etc.

Here are the things I am working on right now:

A. Increased agency oversight – I have already visited both locations of PennCro and have implemented a bi-monthly strategy call. I’m expecting an increase in collections simply from the increased focus on our current agency.
B. I plan to implement a “pilot” legal program during the month of October (meaning first law suits should be filed in November).
C. I am looking to augment current phone channel collection efforts with some off-line collection letters.
D. I have been interviewing agencies as potential replacements to our current agencies, focusing on smaller agencies that I believe will give us more attention.
E. I am evaluating the pros and cons of bringing the collections activities in house. I expect to reach a decision on this by the end of November.

By the end of the year, I would hope to see a significant increase in the number of delinquent dollars collected.


3. Are you willing to share the call stats from the collection agencies? Can you show more information than the collection statistics currently given to us? Possibly find a way to link loan numbers with actual collection efforts?

As I said above, I am working on what I consider to be better monthly reports for loans in aggregate. At the end of the day, regardless what happens to collections overall, no lender is going to be happy unless their loans are the ones that get paid---I can’t guarantee that.

There is a thread on the forum that gives the loan numbers of some delinquent borrowers who say that they have never received a call. I’ve pulled the call logs on each of those accounts, and determined that in every case there were multiple calls per day logged against the account’s phone numbers.

In general, “debtors” as a population generally don’t answer their phones. I’ve seen very well designed and executed calling strategies where less than 4% of the phone calls result in a “Right Party Connect” (which means actually talking to the person you want to). That being said, the good thing about phone channel collections is the short time delay between making an improvement and seeing the results.


4. Mr. Fuller, when will you begin lending on Prosper?

I was a registered lender on Prosper several months before I got the call about a job.


5. Will Prosper change its promissory note to permit acceleration at 30 days?

I don’t think so. From my experience, I don’t see the advantage making the whole amount due at day 30. I envision a process where an initial suit decision is made in the 30 – 45 day range and a letter sent informing the account holder that we are planning to take legal action.


6. Will Prosper change its TOS to include suits against delinquent borrowers as an option? Right now the TOS says junk debt sales at 4+ months.

In order to change our current agreements to allow for lawsuits, a number of challenges need to be met. I want Prosper account holders to know that we will sue them and if we sue, we will win. There are some challenges in this. These include:

A. It is not cheap to sue people. While they vary by state, filing and service fees average something over $200 per law suit across the country.
B. Additionally, given our size and novelty of our asset, no law firm is going to take our business on a contingency basis. At least initially you can assume that legal fees on going to be in the neighborhood of $1500 for a NONCONTESTED suit. If the defendant files an answer, that number goes up. A really nasty case could be $15K to $20K in legal fees.
C. There are so many new aspects to how Prosper works that there will have to be a “custom development” to create the pleadings for a Prosper lawsuit.

What I’m doing at this point is putting together a pilot legal program. I have identified a group of loans which have already defaulted or are on the verge of default. These loans will be included in our next debt sale. In order to gain the legal standing needed, I’m proposing that Prosper buy these loans for the same amount that the debt buyer would and use these as an initial test.

My thought is to do this with a group of loans from borrowers who are all in California, so we only have to deal with one state’s court system. I have a meeting scheduled for Wednesday with the managing partner of what I consider to be the best collections law firm in California. My hope is that we can formally place these loans with the law firm this month and have the first suits filed in November.


7. So how much in legal fees should Prosper incur to sue the borrower of a defaulted $5,000 loan? Would you think it worthwhile to end up losing more money in legal fees than the loan is worth?

Excellent question. To some degree I have discussed it above. The key aspect of the initial legal program is to “build a brand” – create the expectation of serious consequences. So while a purely economic analysis might say never spend more than you can make, there may be cases where do spend more than a loan is worth. I believe this will pay off in terms of reducing defaults (if they don’t default, we don’t have to sue them). Additionally, we will track the results closely so we can come up with a model to designate who we want to sue and who we do not.


8. Will there be more regular bad debt sales?

The problem with debt sales is one of simple math. We have to accumulate enough sellable accounts to make reasonable packages. As our volume increases, the frequency of sales will also. This brings up an interesting question. In looking at how we conduct debt sales, two extremes can be considered. At one end is the concept of a “forward flow” agreement. This would involve finding a buyer that will commit to pay a given price (by credit grade and other attributes) for every loan that defaults for some period of time (usually six months to a year). This has the advantage of predictability; a lender will know what he is going to get paid when for any loan that is defaulting.

At the other end of the spectrum, there are debt sale auction sites (e.g., CreditMax) where buyers bid on individual accounts. This has the advantage of complete transparency – lenders could go on the site and see exactly how many bids their loan received and the price received.

Jumping ahead to the next set of natural questions, a lender who wanted to buy our existing loans could sign up on the auction site and bid on any loans that they desired. I have a funny feeling that if we chose either of these approaches we’d hear complaints – for the forward flow, that we weren’t maximizing the price and for the auction site, that there was no certainty about the recovery (and there is a chance that some accounts won’t sell at all). I’d be really curious what the community thinks is the right approach on these choices.

9. Will lenders be permitted to purchase bad loans? Some may want to do so.

I think the possibility for lenders to be able to sell delinquent loans to other lenders will come with the secondary market that Prosper is working on. But lenders will not be able to purchase bad loans to collect them themselves. There still has to be a unified collection structure, albeit a more effective one.


10. Do you have an especially dark corner in your heart for delinquent borrowers who are also active Prosper lenders?

Yes. I know we are now putting borrower-lender accounts on hold on a monthly basis and I hear we owe the community a thank you for bringing this problem forward.


11. What can you do about the “Amazing Cell Phone Loophole” and the Auto-dialer problems in collections?

Here’s what I have done: I have asked that we include an item in our borrower registration agreement where borrower gives us the expressed right to call them at any number that they provide to us. Then, we can call someone on a cell phone with a dialer, because they have granted us permission to do so.


12. After tackling the more crucial issues of (1) false identity usage, (2) other factual misrepresentation fraud and (3) collection inefficiencies can you foresee using your skills to provide tools /information for lenders to be guided to more prudent loans or somehow flagging / removing the "to avoid" loans to better match up the average skills of lenders such that better loans are funded to begin with? The reason for the last of these questions is there is some concern that the smaller lenders may be jettisoned to make way for industrial lenders although I feel with more confidence in the collections environment you would see held back money reappearing as well as amounts larger than the trial balloons attempted to date by many. Your actions can be a huge financial asset to Prosper.

There are a lot of people at Prosper looking to improve the tools available for lenders to identify attractive loans. The Prosper finance team is actively working to make it easier for lenders to identify loans likely to perform well. As we improve the collections process, we create a better baseline to model against.


13. If you do bring collections in-house (I hope you can), how long would it take you to get a team up and running?

In addition to the “team” there are some technology/infrastructure and compliance considerations. As I said above, I’m looking to make a decision about in-house collections by the end of the year. If we do it, we would probably start up in the first quarter.


14. Will you convince the Prosper powers that be to provide other ways for borrowers to make payments?

Yes. The next site update will have a much simpler entry of new bank accounts for borrowers. I’m also working on the ability to take a credit card payment.


15. What percentage of defaults is Prosper getting that would you put in the 'blood from a turnip' category?

Truth be told—over two-thirds. When you’re looking at suing people, you want to consider credit score, income and assets. “Public Records” are huge red flags – the probability to getting a payment drops significantly if you’re not the first judgment in line.


16. What's Doug Fuller going to do about collections at Prosper? As far as I can tell, these are the items (after sifting through the hyperbole etc): widen the time span of collection calls, stop calling disconnected numbers, call more often, tell callers they're hurting "average Joes", scare late borrowers with lawsuits, find a different collection agency or bring the operation in-house if the above items aren't accomplished.

That’s a pretty good summary of my plan.

17. Providian has run into legal trouble in the past, and had to pay hundreds of millions due to unfair late fee charges and manipulating customers into buying 'credit insurance' that they didn't want. Was Doug involved in any of that and if so, to what extent?

I was not part of this piece of Providian history. My work at Providian dealt with “Recovery” (meaning post charge-off – either Providian originated accounts or First Select Purchased accounts) and with Fraud. The problems with Providian were driven by the marketing and account management groups.


18. Can you give us a vision statement and a proposal on how/when we will be seeing changes?

I think question 16 gives a pretty good summary of the “hows.” As to the when these changes will commence, they have already started. If they don’t translate into increased collections this month, we will be moving to a different collection agency.

19. Do you think it will inspire lender confidence once the default/delinquent rates improve?

I would hope so.


20. Will you please keep us informed about the changes Doug makes and the results that occur as a result?

I would like to update the Prosper community quarterly. To do that, I need to get back to work.

xraider

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #27 on: October 08, 2007, 07:25:49 pm »

Excellent!  I see many of my questions were posted verbatim and answered.  I can live with the answers and will hope for results.
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Mtnchick

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #28 on: October 08, 2007, 07:30:17 pm »

Very good answers. If he follows up with them, things might actually work out :) If they are looking at buying back some of the JDB defaults in Nov that normally would be sold in the December sell out, we should know by PD if they were able to successfully sue them, no?
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Urbi_et_Orbi

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Re: Q & A with Doug Fuller, Prosper’s Vice President of Operations
« Reply #29 on: October 08, 2007, 07:36:06 pm »

I do wonder how that secondary market will work out for lenders trying to unload delinquent loans.  I can't imagine there is much appetite for those - unless the collection rate sky-rockets - and then what would be the point of selling?
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