Prosper recently received the results of a regulatory exam by the Colorado Office of the Attorney General, the agency that administers the consumer lending laws in that state. The Colorado exam went very well, resulting in no deficiencies or “exceptions.”
State regulatory agencies that issue and administer consumer lending licenses typically have the statutory authority or obligation to conduct periodic regulatory audits and examinations of its licensees. State examiners review the licensees’ business practices and documentation, and point out any material or minor irregularities they find, and instruct the licensee to correct any deficiencies. If a deficiency is serious enough, the licensee could be fined or even have their license suspended or revoked. Prosper has undergone many such state exams, and I’m happy to say that the results have all been excellent, with only occasional minor deficiencies noted.
The Colorado exam was quite typical of these state regulatory exams. We provided a list of all loans made to Colorado borrowers during a specified time period (in this case, going back to August 31, 2006), and the examiner asked that we provide copies of 42 borrower loan files. We sent copies of the files, and the examiner reviewed them to make sure all required disclosures were provided, the promissory note terms were consistent with Colorado law, the rates charged were within the legal limits, and similar details. When their review was completed, they sent an exam report indicating no deficiencies or “exceptions” – in other words, a clean exam report.
Prosper has undergone many exams, and at any one time there is usually one or more exams in progress. This is part of the background hum of compliance maintenance of Prosper’s borrower side. This feedback from regulators, along with our day-to-day input from our Prosper community members, is an important check-and-balance for keeping Prosper in compliance it the many statutes and regulations applicable to our borrower-side activities.







