David, Prosper nor Lending Club have ever had any trouble with lending across state lines that I am aware of. The quiet periods are actually due to investment rules rather than lending rules. Credit cards lend across state lines all the time — although they may not have the best practices either, but still it is your choice to use or not use their credit.

It sounds like you are rather mad at Prosper as a borrower. Borrowers received money at rates and terms that they could not have received in other places so I don’t feel much sympathy for any borrower. Lenders were led to believe that Prosper was a good investment but Prosper did not pay attention to the basics (verification and collections) while only worrying about loan volume.

Could you provide links to the scholarly studies? Also, Prosper has provided an incredible means for such studies. There is likely not evidence that that exact same discrimination does not occur in banks every day.

Also, most of the lenders are small investors. 90%+ of all lenders loaned $7,000 or less. If you look at lenders who have an average loan age grater than a year, have $1,000 or more invested on at least 20 loans, the median return is less than one percent. I don’t call that usury — that is called getting screwed. Prosper always advertised returns much higher than that it its advertising and used loans that had not even turned 30 days old in its estimated ROI calculations.

Chris, Although, I am not a huge fan of Prosper’s operational effectiveness. I still think it is a good idea and hope that they can come back. Hopefully, under new management. It is a finance company being run by web 1.0 people looking for eyeballs. And I completely agree with the sentiment that the SEC was was blind to extreme rip offs like Maddoff. While investors like Muleshoes did horribly, at least Prosper was not a Ponzi scheme and he will get most of his money back.

It’s Lenders being allowed to cross state lines without properly registering as Lenders.

Prosper themselves admit to violating Truth-in-Lending, Equal Credit Opportunity Act, and Fair Credit and Reporting Act.

The Borrowers should unite and force Propser to prove the underlying debt before making another payment!

TL, I am glad that you had a good experience with Prosper as a borrower. Unfortunately, the number of bad experiences for lenders was starting to reach the tipping point where borrowers were going to have much more difficulty getting a loan at a decent rate.

TL Hood

Prosper works for individual borrowers and lenders like eBay acts for buyers and sellers. Prosper takes very responsible extra steps of gathering much personal financial information, including credit information, which helps individual lenders make much better informed decisions that they can without Prosper.

The SEC has a dirty hand in our currect economic recession, failing to focus on what should be its prime objective of protecting us from fraudsters such as dishonest mortgage brokers, and the $50 billion Bernie Maddoff ripoff that the SEC utterly and woefully failed to investigate even after many complaints.

It doesn’t take much financial knowledge to understand that the SEC is wrong to put complicated, irrelevant regulations and impossible lending requirements onto individual investors lending $50 to a friend, family member or Prosper community member.

Please contact the SEC to let them know that community lending services are about a community of individuals, and that the SEC must adapt to be able to recognize and deal with Prosper as the type of service that it really is.

Corey Chambers