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Prosper Response: New York Times Article October 27, 2010

by Prosper on 10/27/10

Today a highly misleading article appeared on the subject of one of our former board members, Raj Date. Raj has just been appointed by Elizabeth Warren to a special advisory post at the Consumer Financial Protection Bureau. We are very proud of Raj’s track record of consumer advocacy and championing reform in the financial services industry.

The article made several erroneous statements about Prosper and Raj’s relationship with us, despite our having shared information with the reporter while he was writing the article that directly refuted his assertions. In fact, several of the assertions are patently incorrect based on a cursory review of our site. The reporter chose to ignore the facts and go ahead with the slanted perspective for reasons that are not clear.

The misstatements and misrepresentations include the following:

  • Suggesting Prosper is a sub-prime lender: obviously refuted by the fact that our average bureau score of borrowers is over 700. In fact it was 715 in September.
  • Suggesting Prosper arranges low-doc loans. The fact is that our underwriting and verification procedures are highly rigorous, and include extensive documentation of employment, income, and identity of the borrowers.
  • Suggesting that there is uncontrolled risk and high losses in Prosper’s loan portfolio. As clearly illustrated in our recent report on risk performance, losses on assets booked in the last 15 months are beating expectations and are 1/3 of the loss rate on loans booked in 2007 and 2008.
  • The reporter failed to note Prosper’s long advocacy of consumers and the fact that Prosper’s CEO Chris Larsen has been a champion of consumer privacy and protection for over 10 years.
  • Suggesting Raj’s relationship with Prosper was “rarely reported” when in fact it was properly disclosed in all relevant SEC filings and on our website.

Shortly after the article appeared, another industry journalist observed the egregious slant of the article and refuted it with a blog posting entitled “A Failed Dirt-Finding Expedition On The CFPB”.

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2 Responses

Peter Renton | October 27th, 2010 at 7:37 pm

While the NY Times article obviously contained some misleading information, I don’t see it as being damaging to Prosper or the peer to peer lending industry.

You mentioned one blog, there was also this posting on Alternet that was even more scathing: http://bit.ly/bqQhen (this also comes in as one of the first results on Google News when searching on Prosper Marketplace).

In the end I think this will blow over quickly and people will forget about it. People have short memories and some new juicy news piece will take over.


posted in Featured,Prosper News 2 comments »

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