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> Let's play a game. You are in charge of a large pile of cash and want to make it grow by giving loans. Each day, two people apply, and you can give out one loan (you will have to rank the applicants). When people de-fraud you, you lose all of the loan. When people don't or can't pay you back, you lose all of the loan. When people pay back the loan, you make a little money. Actually, many people, including me, played a similar game on Prosper.com (as it was many years ago, not the current version). I can assure you that the reality is unlike your false dichotomy of losing everything [1] versus making a little money. Even non-performing loans (that were not fraudulent from the get-go or discharged in bankruptcy) aren't totally worthless [2], as there is a thriving business in junk debt, and, presumably, at least some payments were already made. Interestingly, I still have pennies trickling in from there occasionally, presumably from people who couldn't pay before but now can and are doing so because they know the lenders were individuals and not a faceless corporation. [1] Prosper had a fraud guarantee, but it was a bone of contention among early users that they did not sufficiently honor it and that they subsequently changed the platform to increase borrower anonymity, thereby increasing the ease/potential for fraud. [2] How Prosper handled these was another bone of contention. |