The Next Forum Revolt Brewing Over Fraud

It's looking like the next big forum uproar will be over Prosper's actions in the forums to stamp down the revelation of personally identifiable information (PII). Where does this information mostly come up? Why, when lenders go hunting for fraud. This has coalesed around a posting by Prosper Shira reinforcing Prosper's current PII position:

Members have done a terrific job helping Prosper identify and prosecute fraud and we appreciate your desire to alert fellow members on suspected fraud. After reviewing the numerous discussions about fraud and personally identifiable information (PII) occurring on forums over the past few weeks, I’d like to take an opportunity to communicate directly with you about this important subject.

The best way to alert Prosper to suspected fraud is to click the “report this listing” link located on every Prosper listing. Your reports go into a priority queue that is monitored daily by Prosper’s trust and safety team and every report is taken very seriously.

Prosper has the right to cancel any listing at any time, and if we find the reported listing is fraudulent we will exercise that right. Our investigations may take several business days to complete, and an open listing under investigation could become fully funded on the site by the time it is cancelled. When a listing is cancelled, we send a cancellation email to the bidding lenders informing them of the cancellation. Sometimes reported listings are cancelled for reasons other than fraud. If a listing is cancelled due to fraud, the borrower will be banned from Prosper.

If you choose to post your suspicions about a specific listing or member on the forums, please do not include a member’s personally identifiable information (PII) or links to any website that reveal the member’s PII. Even when a listing or member appears to be fraudulent, Prosper has an obligation to protect our members’ personally identifiable information on our forums. If you have PII information linking a member to fraud, please include it in your report to Prosper, and not on the forums. Creating posts revealing PII on the forum will result in a seven-day suspension for the poster for first time offenses. Members with repeated offenses will be banned from the forums and could have their Prosper registration terminated.

To further protect a member’s identity, Prosper cannot share specifics back to those who report fraud or on the forum talking about what action, if any, was taken. However, you have given us great suggestions about how to improve our communications both back to the original reporters and forum participants. In the next few site releases, we will update our onsite and outbound messaging as well as forum policies to reflect your suggestions.

There's some very good posts from Ira, 112233, and others, but xraider seemed to sum it all up:

Shira, why is Prosper seeking to take all-important fraud detection away from those who do it best? Prosper already relies on lenders to report suspicious listings, and it looks like Prosper is trying to defang lenders' ability to (1) detect fraud (as Ira said, it is a collaborative effort); and (2) having detected fraud, warn others about it.

Prosper, more and more, appears to be a safe harbor for scamming borrowers. Is Prosper going to do anything to give lenders any assurances that with watered-down fraud protection we can have some certainty that we're lending to people who really will pay us back?

Also, what is the justification for preventing lenders from sharing publicly-available information? Prosper has eliminated the use of names, email addresses and telephone numbers in listings, taking that tool from lenders. Now Prosper is saying that if, somehow, lenders find fraud through other means (such as FaceBook, or MySpace, or eBay) that information should not be shared? Why not? If it's publicly available, there is no privacy to protect.

I would love to know Prosper's reasoning for banning the sharing of publicly available information.