HomeReviewsProsper.com Review – Prosper.com – Scam or Legit?

Prosper.com provides a platform for the obtaining of and investing in loans of modest amounts, between $2000 and $25,000. The website states that Prosper, founded in 2006, is the largest peer to peer lending marketplace with over $236,000,000 in funded loans.  Prosper connects people who want to invest money with people who want to borrow money.  The quick view of the process is that borrowers post a loan listing that includes the amount and purpose of the loan, and investors invest in funding those loans that meet their investment criteria.

The Process

The Borrower

The actual process is, of course, somewhat more involved than that.  Loans are of a one, three or five year duration and have interest rates and closing fees that are  based on the their “Prosper Rating”.  At present these fees range from .5% to 4.5% of the loan’s stated value. The Prosper Rating is Prosper’s in house rating of the relative risk of the loan based on other Prosper loans that have similar characteristics.  These ratings affect the maximum loan amount, as well as interest rate and closing fees. There are seven Prosper rating grades listed on the website, starting with the top rating of AA, and ending with a rating of HR at the opposite end.  As of this post the borrower’s APR could range from 6.93% to 35.64% depending on the Prosper rating, length of loan, and number of prior Prosper loans.

The Investor


Prosper seems to allow an investor to choose to invest in the funding one loan, or diversify the investment to help minimize the risk by spreading the investment over many loans. The rate of expected return for an investor is tied to the Prosper Rating.  The better the rating the lower the expected loss and thus the lower the expected rate of return.  The more risk the greater the potential return. For  Prosper loans originating from July 2009 – May 2010 the actual rate of return varied from 6.3% and averaged 10.4% per their website.  Investors will pay a 1% annual servicing fee.  All loans are unsecured and are made by WebBank, a Utah chartered industrial bank and sold to Prosper.  Prosper does not guarantee any repayment of loan notes, but they do guarantee to pay the entire unpaid principal If a lender is the victim of a defaulted loan from a person who has committed identity theft.

Prosper the Company

Prosper was founded in 2006 and has over 1,080,000 members.  Offices are located in San Francisco, CA.  Chris Larsen is the CEO and Co-founder.  Prior to Prosper, Larsen co-founded and served as CEO of E-Loan and made E-Loan the first company to show consumers their FICO scores.


Prosper.com puts borrowers and investors together and makes no guarantees of repayment to investors.  They do provide a rating system that implies a scaled risk assessment that an investor may heed.  The loans are indeed unsecured and that means no collateral, so it is buyer beware. However they have funded over $236,000,000 worth of loans. As always it is up to each of us to determine the viability of any business to meet our needs. So is Prosper.com a scam?  The facts provided above should help you answer the  question for yourself.



Rich Riley
"Helping People Make Better Decisions Through Better Information"

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Prosper.com Review – Prosper.com – Scam or Legit? — 18 Comments

  1. I was considering trying this but after reading all these post this sounds more ridiculous than I could imagine when I got the letter I thought I was dealing pretty much with a bank or loan department not with some online scam this is so crazy and it should be reported.I feel bad for those with lower credit scores and can’t find a loan but I have an 825 tear one credit score and own my own home and have plenty of money in the bank 80% of it tied up and investments. but I thought I do a friend a favor and help them out with this with my credit thanks everyone for all your comments what a crazy idea that was

  2. So I received the letter they sent me through mail, thinking it was a good thing to help me out with my credit cards that I have I decided to call customer service. They gave me little detail but still thought it was something that i’d look into. So I got on my laptop as they mentioned to do I put in all my information and once ‘ve put in all my information and submit the darn thing. within the website page it said ,” temporary technical issue” within the website!! >:/ !! so I don’t know wether I gave all my personal info too or is this actually legit . Someone please help

  3. The warnings and cautionary tales about being a lender using Prosper do have merit. I can tell you that my personal experience with Prosper has had it’s ups & downs but ultimately you need to realize that the interest you will recieve will be roughly half the rate they agree to because of Prospers tricky math.

    Unlike most loans, Prosper bases the earned interest on a monthly recalculation of the loan balance, not on the leant amount, so with each payment a payor makes the balance and interest payment lessens. Roughly I have found that the end result is that if you lend 100.00 at an advertised interest rate of 12% you should only expect to only earn roughly 6$.

    Considering the high default risk, and the vastly lower misleading advertised reward, it makes Prosper not very enticing. This probably accounts for the low percentage of returning lenders to Prosper.

  4. Prosper is a joke. No sane investor would trust them. They are the only ones making money. For an investor’s 9% return they are charging the borrower upwards of 30% per annum and then get all dramatized when they default.

    I applied for a 12k loan, I am retired and have no mortgage and my experian score is 744 and my Fico is 736 and when I tried to list they said “Whoa – can’t list you don’t meet our credit requirements.; What a joke. I have 3% lines with AMEX and 8-11% elsewhere but I’m not good enough for Prosper.

    Give my a break – they ought to be put out of business. First of all how many AA loans at what interest rate do they broker. That information is not available.
    Well how many CC loans do they broker at what rate. That information is not available.

    I wouldn’t put 10 cents into it. If I am good for $12k loan no one is.

  5. All you people writing these negative reviews are either sour from not receiving a loan you applied for or because you’ve taken a loss in the early stages and think it’s a scam. I have been with Prosper.com now for almost 3 years now and have an average return of 7%. I am typically cautious with my investments, investing primarily in AA, A and B rated loans with borrowers who have credit ratings of 660+. I do occasionally invest in a C, D or even E rated loan if it seems the borrower took the time to explain why they needed the loan in the optional description.

    If you are looking for an alternative investment, you should consider Prosper (or another Peer to Peer lending site such as lending club). Banks are offering negative REAL returns (returns after inflation) and locking your money in a CD or rates given in savings accounts is only going to lose you money in the end!

  6. I am not certain why Prosper is even in business. I know every story has two sides but the feedback that people have written is true. I sent multiple times my documentation; had to call to verify and they said everything is fine and dandy and guess what, I get a phone call saying that my pay statement is a blur. I resent the same documentation, no replies whatsoever from their e-mail service. When I called and e-mailed to requested confirmation; nothing at all. I got a call about a week later which they said I would need to verify some additional information so I called back and left several messages. Got a call the next day from a lady trying to reach me and again tried to call but no one but a voice mail. I went to thier website to leave another e-mail and they closed my account. This happened twice. What a lousy way of doing business. If you have a choice to go elsewhere, please consider the posts people have written so you do not have to waste your time with Prosper.

  7. The process for borrowing is long and repetitive, but stay with it and you can get your funds. I have been advised that my funds are somewhere between the Prosper funding source and my bank account, and I think the transaction will be successful. I’ll let you know when the funds get deposited in my account.

  8. Its awful. Im struggling in life right now and cannot even find help. My credit is bad due to a divorce, i work two jobs but before i started working two jobs i got very behind. I almost got evicted, but fortunately i got it caught up. I let the devil in life one time and he reaked havoc and i went to jail. I recieved three felonies for my bad choices. I am now trying to pay my fines and fees, support my two children, and support my new family and i cant do it if i cant find a way to find a loan to pay my fines im behind by October. Does anyone know of where i can look for some help?

  9. I added prosper to my portfolio about a year ago and have mostly invested in E and HR, with only a few notes ranking as “good” as C. Strangely enough I have never had anyone default on a loan, no deadbeats and no late payments, I do have to deal with a bunch of canceled notes though. My theory on this is that the scammers and other scum tend to forge documents to make themselves look as good as possible to get investments fast, thus giving themselves a higher rating. Meanwhile the legit borrowers who tell the truth are, like most real people, not exactly perfect, and end up getting the raw deal with I low score and a higher interest rate. However those same people that are honest and get a lower score also tend to be honest and end up paying.

  10. On the contrary, as an investor in prosper.com I am very glad that prosper.com DOESN’T have loans for everybody, I have had several loans that I’ve invested in be cancelled because the borrower did not comply to all of the standards set forward by prosper.com. No offense to these canceled borrowers, but it makes me feel a lot better about the concept of social lending if prosper.com has more stringent standards to getting a loan. That AA loan that went south before the first payment sounds pretty frustrating, but let’s all remember that there is risk involved here, and that’s why diversifying is important for a strong note portfolio with prosper.com. Bob, I’m glad for your sake that you only lent that deadbeat $25. As strange as this sounds, I am staying away from the AA type loans, because it seems like any scammers who can make it through the cracks in Prosper’s system are going to try to look as good as possible. AA and A loans still pose a high risk in my mind, but with a lot lower return.

  11. Prosper has a horrible business model. I have a FICO score in the mid 700’s, sent them bank account statements, multiple i.d’s, recent pay stubs, etc…. I sent them everything they requested except a utility bill. I explained many times through emails, and phone calls that I don’t receive utility bills, that it is included in my rent. I also sent them a copy of the rental agreement, received their identification post card and entered the code, yet all of these were not good enough. Members funded my account within a week, yet they let me linger another week, because my status was “pending” , and then they decided after the 2 weeks expired that I wouldn’t be approved after they reported that I was funded….???? All of this because I didn’t have a utility bill? What kind of Donkeys am I dealing with here? Really?? The utility bill was the deciding factor ?? Don’t waste your time with these idiots !!

    • I had a similar issue…

      I don’t want to leave my name for fear of retribution (They have many sensitive documents and could do some damage to my identity) But I have to agree with this poster… The customer service at PROSPER is offensively horrible! They do not give a darn about you, and won’t spend one second to remedy the simplest issue that may be a stumbling block for THEM to get your loan through to origination resulting in you being DENIED for a loan.

      I Tried to get a loan with Prosper for 25K, (The most they will lend out) I make around 100K a year, get a tax return of around 15K per year and a bonus of around 20K a year, so I make good money… My “Experian Plus” credit score was about an 800, no problem there. My loan funded in under 4 days. Good to go! (Or so I thought), I am an honest person, and I planned to pay it back in 2 years, not 5. I have paid off many loans in the past and never misses a payment, and would have had no issues paying off this one as well making everybody involved happy, but that was no to be. I started uploading the necessary paperwork and had it all uploaded within a day. The problem started because I went from contractor status to full-time the year before so my bonus was pro-rated for one month and apparently they couldn’t wrap their heads around this. Really? Is it really that hard to multiply the amount in my check by 12 and add the tax back in to see how much I will get that year and compare it to what I claimed?!

      Every time I called I got a pissy, huffy, bubble gum snapping 16 year old on the phone that just oozed indifference and contempt for me when I was being perfectly nice and patient despite the fact that I wanted to scream into there ears until the “Whatever” attitude blew out the other side. I was simply trying to explain my situation (Which was not complicated, nor was I long winded). I had one girl that would raise her voice to the point of yelling over me EVERY TIME I tried to say a single thing in a tone that can only be described as “Bitchy”. Mind you I kept my composure to be the bigger person as not to escalate the situation, after all they have my future in their hands and I didn’t want to screw that up by pissing off a immature teen who has my SS #, address, etc. right in front of them, and would have no ethical quandary about emailing my info to the world. I got the sense she didn’t really care about her job. What kind of customer service is that!? It didn’t end there, I got another gem on the phone later on who was as rude and unhelpful as the first.

      The email system… I am all for no-contact online systems you can breeze through to get something you need done – as long as they work. I felt like no one was home, and I was getting emails from Robo-tron 5000. I would get a “We could not verify yada-yada” email, at which point I would try to email them back but NO ONE would EVER get back to me. Don’t tell me there is a problem over email and then disappear never to be heard from again. Naturally I’m going to have questions after an email like that… Like IDK, “WHY”!?, or, “What can I do to help you help me close this loan!?”… nope, nothin’. Try emailing them back, I dare you. You think you’ll get a response? Good luck.

      Long story short, Prosper’s system is flawed, and their customer service is the WORST I have ever encountered. Steer clear, their rates are not that great anyway… 11% when I have an 800-ish credit score!? Are you serious!? I went to my Credit Union and they gave me a 9.5.

      I will never even attempt to use them again. And I’m letting everyone I know how bad my experience was in an attempt to either make Prosper wake up and fix the problem, or go down in flames.

      • Prosper has an agenda that only it understands. Like the previous poster, I have excellent credit and make well into the six figures and wanted to support the forum as an alternative to the traditional banking. I believe that this approach is good for the economy and the average American. I posted a listing for at $25K loan. It was completely funded within days. I sent each and every item requested, yet continued to receive cryptic and contradictory emails asking for items that had already been acknowledged as being received. Every piece of documentation was provided in a timely manner and was easily verifiable. However, I was strung along for about a week after the funding was established. I would receive bizarre inexplicable emails with mindless form letter content that were unintelligible. I even called at one point, yet could get nothing but nonsense. It was like asking “What time is it?” and getting a response: “I have brown eyes”. I had a distinct impression from the outset that it had decided that it didn’t want to complete the loan for its own internal reason and was not acting in good faith. In the end, the loan was not approved because it said that I had not provided documentation that I had, in fact, provided and confirmed receipt of multiple times. It has its agenda. It is not a good faith lending vehicle. I imagine that it wants the less-credible borrower so that it can make more money than for a loan to a high quality borrower. Sad commentary for this enterprise.

  12. Prosper at this point is not exactly a scam but alot of things are not right. I invested $550.00 across 19 loans to strangers , a test. Prosper had given them ratings (0-10) not sure how they arrived at the rating. Prosper also put them in classes: AA to HR (high risk) not sure how the did that either. So me & a whole lot of other lenders gave some dude $13000 for 3 years @ 8.99% interest. Prosper had given him an 8 & a A rating. The deadbeat didn’t make even the first payment !!!! Deadbeats got to $$$ & gone & me & the whole lot of lenders take the hit. We do not know the deadbeat…can’t even be sure there is a deadbeat….may be a Prosper scam…no way we’ll ever know…so i had $550 invested at near 10% average interest…would have made $53 this year in the test….the deadbeat stole $25 of my profit in the first month….I’m down to a potential $28 profit (5.1%) & that’s if there are no other deadbeats in my other 18 loans !!!! hope this helps.

    • is there any lender or lenders willing to work with bad credit…looking for a loan to buy a semi truck for 12,000

  13. Yes. Proper.com is a complete waste. I had a FICO score of over 650, Prosper kept sending me “Congratulations, you are approved to list your loan with Prosper”… every time I did, it kept telling me your credit score doesn’t qualify… No one at prosper (sounds like they’re are working in a warehouse) could give me a good explanation as to why I was getting the congrats e-mails but stated that my credit score did not qualify. What? I thought prosper.com has loans for EVERYBODY. but some risks for lenders may be higher than others. That simply is not true. Don’t let the username fool you. This is an actual prosper applicant.

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