Wednesday, November 14, 2007

Prosper Violating The Lender Registration Agreement Again

As had been previously noted, Prosper is testing out a new collections agency. The fly in the ointment is that HollowOak spotted that it's kinda, sorta, maybe against the lender registration agreement.

I know this is a touchy subject area, but are Prosper (again) violating the lender agreement? Lenders signed up on a loan on condition that it be handed over to a named agency as laid down in the site policies and T&Cs. can Prosper now unilaterally assign the loan to a different agency?

Oh, yes, that legalistic lender registration agreement:

When a payment becomes thirty (30) days past due, Prosper will assign the loan account to the collection agency you selected at the time of registration. If there are multiple Lenders on a loan to a borrower, and one or more of the other Lenders selects a collection agency different from the one you selected, you agree that Prosper will use the selected collection agency common to the Lender or Lenders who have the greatest ownership interest in the loan. In the event of a tie among the Lenders as to their choice of a collection agency, the agency will be selected at random by Prosper.

There's nothing in there about Prosper changing the collections company. I have little doubt that Prosper is attempting this test with the best of intentions (improving collections), but I have even less doubt about their response should a lender decide to arbitrarily operate outside the lender agreement on a similar scale. They have come down quite hard on some lenders in the past.

This was bad form, especially with so many options available to Prosper like contacting the lenders to ask for a change or purchasing the bad loans during the next debt sale.

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