Wednesday, September 26, 2007 - responds

Prosper has asked me to publish the following response:

Dear Fred93,

Thanks for keeping up-to-date on the latest Prosper newsletter. In the Borrower Success Story that you’ve quoted (above), we faithfully reproduced his submitted story without changes. The user's Borrower Success Story quoted the interest rate of "13.4%" when, as you pointed out in your blog, his borrower rate was actually "14.3%." Going forward with the newsletter, we will diligently fact-check each story before publication.

Thanks for posting,


Hey, whadda ya know, they read my blog!

Tuesday, September 25, 2007 - Don't Mislead ... again

Back in April'07 I wrote an open letter to titled "Don't Mislead People". I think that's a pretty good mantra. I don't know how people write entire books on corporate ethics, when you can say most of it in 3 words. That letter contained a long list of things that Prosper was doing that I thought were misleading. To Prosper's credit I think someone understood at least some of what I was saying, because some of 'em got fixed. I don't think they really intended to mislead. They just weren't thinking clearly. End of story, right?

Recently a few more have appeared. There was a recent online advertisement that used a screen image of a listing page where the interest rate was "photoshopped" to show a lower interest rate than the actual loan. To their credit, Prosper fixed it after a member pointed this out. I wasn't on the ball, and didn't save a copy of the original photoshopped ad. Must have been some overzealous marketing person, eh? End of story, right?

Oops. They did it again! The September borrower newsletter contains a story about a borrower and his loan. It says he obtained an interest rate of 13.4%. Here's a picture from the newsletter. (I have added the red oval.)

Newsletter picture

Note that it says he "obtained 13.4%". We have to assume that they mean the interest rate that he actually had to pay. On the system, that's called the "borrower rate" to distinguish it from the lower interest rate that lenders receive. In fact, it is very clear from context of the ad that they mean the rate he had to pay, because in the quote he compares this to "14%" that the bank wanted to charge him. Well, 13.4% is indeed lower than 14%, so this sounds great until we look at the actual listing page. It tells a different story.

Prosper Listing Page Image

Again I added a red oval, circling the borrower rate this borrower actually obtained. It doesn't agree with the story. It is even a higher interest rate than his bank wanted to charge!

Surely would not intentionally publish a misleading story, eh? What do you think?

In either case, it is another in a series of confidence eroding developments. Golly guys, at the very least get your compliance guy to check facts in your ads and newsletters.