Prosper.com Review – Too good to be true? | Is Prosper.com a Scam?

VN:F [1.9.20_1166]
Rating 2.9 - 264 Reviews

Prosper.com is a peer-to-peer loan website operated by Prosper Loans Marketplace, Inc. Are they all they are cracked up to be, or is the website a scam?

Their business model of connecting small investors with people in need of microloans has endured challenges from the U.S. Securities and Exchange Commission and survived well past the original predictions of its demise issued in 2006, but it is worth a closer look.

Prosper.com is attractive to borrowers because it offers loans at lower fixed-rates than banks. Meanwhile, it allows lenders to receive the “risk premium” returns that come from making higher-interest-rate loans to riskier borrowers.

The loans are unsecured 3-year loans that are fully amortized, and prosper.com’s agreement with the SEC, has given its investments the legitimacy that comes from following the rules established for securities trading.

Prosper.com -The Good:

Like any other investment vehicle, you should never commit more money than you can afford to lose. However, the small dollar amounts involved in prosper.com loans make it easy for anyone to invest, regardless of how little cash they have to spare.

Making loans through prosper.com offers the intangible benefit of positively affecting someone’s life. We have all been in a tight spot where an extra couple of bucks could mean the difference between survival and disaster, and prosper.com throws a lifeline to people who have nowhere else to go. Assuming that the borrowers are telling the truth.

Prosper.com-The Bad:

Prosper.com takes reasonable safeguards to verify the identity of its loan recipients, but it is still a challenge to separate the good credit risks from the bad. In August 2008, reported delinquency problems plagued 18.5% of the loans it had made since its inception, while more than 35% of the loans that they made in February 2007 ended up in some form of delinquency.

Prosper.com itself acknowledged this in July 2009, but they claim that they have turned the corner, with delinquency activity peaking at the end of 2008.

Prosper.com also has a B+ rating with the Better Business Bureau at the time of this writing. Here is the link to see the company’s profile for any updates: Prosper.com BBB Profile. Of the complaints received by the BBB, the majority of them were customer service issues, which is not necessarily a good thing but all of the complaints seem to have been answered and resolved relatively quickly which is a great sign for customers with issues.

Prosper.com-The Final Verdict:

Prosper.com is an attractive concept with an execution that is deeply flawed. There are plenty of deserving people out there who just need a break to get back on their feet, but more people out there are willing to game the system for quick cash.

Trying to separate the “mislabeled” credit risks (that will pay back their loan) from the genuine risks (that are more likely to walk) is too much of a challenge for the tools provided by prosper.com.

Although the SEC investigation has established that prosper.com is a legal operation, so are casinos and other gambling establishments. However, the casinos are also willing to accept small dollar transactions and are much faster at letting you know whether you will ever see your money again.

VN:F [1.9.20_1166]
Rating 2.9 - 264 Reviews
VN:F [1.9.20_1166]
Rating: +1
Prosper.com Review - Too good to be true? | Is Prosper.com a Scam?, 2.9 out of 5 based on 264 Reviews

Stacy Lewis

Stacy Lewis is a stay-at-home mom and proud single mother. Her true love is her baby boy Mason, who is her inspiration for life. After getting laid off from her position as a legal assistant in 2007, she turned to the internet as a way to support her family. Unfortunately, the road to success was rocky and her first 18 months brought nothing but credit card debt, financial stress, and one "get-rich-quick" scam after another. Finally, after almost 2 years of struggling, she was fortunate to find a great mentor who took her under his wings and taught her what it really takes to succeed online. Ever since, she's been blessed to generate a full-time income from home and views every day as an opportunity to inspire others with the same goals. There is nothing that makes her happier than being able to give back and help others!

You may also like...

7 Responses

  1. Charles says:
    VA:F [1.9.20_1166]
    (8 out of 17 people found this review helpful)
  2. Cory says:
    VA:F [1.9.20_1166]
    (7 out of 7 people found this review helpful)
  3. Pmac says:
    VA:F [1.9.20_1166]
    (7 out of 8 people found this review helpful)
  4. Kent says:
    VA:F [1.9.20_1166]
    (9 out of 9 people found this review helpful)
  5. MPeterson says:
    VA:F [1.9.20_1166]
    (5 out of 5 people found this review helpful)
  6. Mellie says:
    VA:F [1.9.20_1166]
    (4 out of 10 people found this review helpful)
  7. Ajax says:
    VA:F [1.9.20_1166]
    (11 out of 12 people found this review helpful)

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>