At times it's a bit confusing why Prosper does some of the things it does. Laws & regulations (national or state-wide) are one of the things that ties the hands of any company in the banking world. Five Cent Nickel has done a review of the Fair Debt Collection Practices Act (FDCPA), one of the dominant pieces of legislation that limits what lenders can do to collect on loans. Some of the topics are very reasonable (can't go over with a baseball bat and threaten their pets, for example) while others may be more controversial in the Prosper space (can't publish a list of debtors).
The highlights reel on restrictions comes from a Bankrate article:
Collection agents may not:
- Call before 8 a.m. or after 9 p.m.
- Talk to anyone but you (or your attorney, if you have one) about the debt.
- Threaten to garnish wages or seize property unless they actually intend to do so. Garnishment is illegal in some states, and in others requires a court order. In many cases, property seizure is not permitted. Check with your state attorney general's office or state consumer protection office to find out what is legal in your state.
- Threaten to sue unless they are actually taking legal action. In some states, third-party collection agencies may not sue.
- Threaten you with arrest or jail.
- Use obscene language.
- Annoy or harass you with repeated calls.
- Call at work if you have asked them to stop.
- Falsely claim to be an attorney, a representative from a credit bureau or a member of law enforcement.
Also in there is a requirement to not publish a list of deadbeats or otherwise indicate that someone is in default unless you're telling a credit agency.
If you're wondering why Prosper isn't doing something related to collections, remember the laws and restrictions preventing them from doing something.
Update: Here's the FDCPA's full text if you need some help falling asleep at night. Also noted the anti-disclosure requirement.