ira01's blog

Although Prosper rates an F for most of what it does, its marketing department clearly deserves an A for its ability to get articles published that read as if they were Prosper press releases.  There have been a bazillion articles published about Prosper, and they almost all may as well have been written by Prosper.  Typically, they uncritically regurgitate Prosper's misleading statements about its default rate, lender performance, etc. 

But finally, there is a hard-hitting article on The Motley Fool, a well-respected financial site --  http://www.fool.com/investing/value/2008/08/29/avoid-this-company-like-the-plague.aspx.

"If [online person-to-person lending] worked, it would have been a tremendous win for all involved. It's too bad that online-lending pioneer Prosper.com botched the execution of that concept. Sure, any start-up will have growing pains. It's how a company responds and adapts to those pains that really matters.

On that count, Prosper has earned an F."

The Motley Fool article (which mentions both Fred93 and me) spends most of its time on Prosper's federal bankruptcy court filing in the Oakland Gaerke case, in which Prosper makes the startling (and ridiculous) claim that "it is denied that Prosper loaned any money directly to the Plaintiff or Defendant, Ashley Gaerke."  Prosper's position in that case is that it merely facilitated separate loans made directly from lenders to the borrower.  This is, of course, 100% contradicted by Prosper's various legal agreements, including the Lender Registration Agreement, the Prommissory Notes, Prosper's FAQ, and its SEC filing.  Fred93 blogged about this issue in depth here, building on a prospers.org thread started by xraider (who discovered this case) here.

The Motley Fool article also spends some time on the performance of Prosper's loans, noting that "[f]ully 18.5% of all dollars loaned on Prosper between its inception and the end of June 2008 have gone delinquent. Some individual months look substantially worse: More than 35% of the dollars loaned in February 2007 are in some stage of evaporating."  The article also describes several of my complaints about Prosper, apparently taken from my long-running (and soon to be updated and blogged about here) thread on prospers.org titled My Summary of Prosper's Problems. 

Kudos to The Motley Fool and its author Chuck Saletta!