interesting thread...

with the help of the forum members, prosper chimed in at the end to suspend all the accounts. they wouldnt have discovered this w/o the help of the community
http://forums.prosper.com/index.php?showto...ndpost&p=167289

...and yes, it appears city data played an important part

Actually, as an attorney, I do "deal with liability on a daily basis."

If Prosper wants to limit the city information (or all the information, for that matter) to registered lenders, that is fine with me. But lenders absolutely have a reasonable and legitimate need for all of the information (formerly) provided, and a lot more to boot. If Prosper didn't tell borrowers which portions of the information they enter to seek a loan is available to all lenders, then shame on it -- and it should have simply started providing those disclosures to borrowers, rather than hiding important information from lenders. I'm not a fan of conspiracy theories, but I think it is suspicious that Prosper eliminated the city information shortly after it had to buy back ten or eleven loans that were fraudulent based on the investigation of forum members using the borrowers' city information. One certainly might reasonably wonder whether Prosper would rather such fraud not be discovered, since then it is the lenders, not Prosper, that takes the haircut.

Lastly, I've never asked to see "all the info that a bank sees." In fact, I'm on record here previously opining that certain information should not be routinely available, such as the borrower's place of employment, complete name and social security number. But other information should certainly be available, and that includes the borrower's city and much more credit detail. Someone seeking MY money (and it is, after all, my and the other lenders' money, not Prosper's money) has to be willing to trade a certain amount of their privacy in return. They would certainly disclose far more information to a bank, and let's face it -- most borrowers are here because a bank either wouldn't loan them money at all, or would only do so at a higher interest rate. Thus, they should expect to trade MORE privacy for a loan here than they would with a bank, not less.

I have mixed feelings on the removal of the city data.

I have registered as a lender for the following reasons:

1. By offering competitive loan rates, expand businesses or offer savings to businesses or households to service debt.

2. By competing against credit card companies and big banks, promote sound money principles for the economy.

3. By promoting individual and business financial health, strengthen the local communities against crime and poverty.

4. By diversifying risk, and breaking the big banks' and credit card companies' credit monopolies, earn above average returns with below average risk.

As many have pointed out, specification of city location is a factor that could reduce risk. Flipping that on its head, non-specification of city location increases risk.

Bottom line, over time, the increased risk to lenders will cause lenders to charge a percentage point or two above what they normally would have.

The reason for removing the required specification of city location was stated as protecting the borrowers' privacy. Ostensibly, Prosper wants to make borrowers feel more comfortable, thereby growing the pool of borrowers and thus, loan activity. That is Prosper's goal with this.

But unfortunately, despite good intentions, the increased risk premium will HURT borrowers. i.e. they will pay a premium for their "privacy." Of course, if they want even more privacy, they will go with a big bank or credit card. But then of course, the rates for those are even higher. What I'm saying is that increasing the risk premium to charge to borrowers makes Prosper lenders that much LESS competitive vs. big banks or credit cards, and would therefore lead to higher interest rates, less borrowers and less loan activity! Opposite of what is intended!

Another of Prosper's goals is to be like eBay and foster a sense of community. Removing the city location is a step AWAY from this. It will be harder for people who want to invest in their local community to find out exactly who is in their local community.

Look, I am all for privacy rights. But I am also a believer in transparency. If Prosper has decided that borrowers need a level of privacy protection, Prosper should at least give the borrowers the option of whether they want to pay a premium for this or not!

I say two things. 1.)Make the city location an optional (and searchable) field that borrowers could fill in. 2.)I would also like to join the call to have a search by location. *Even if that location is by state-only!* This will allow lenders and Prosper to meet their goals of increasing loan activity, revenue, profits, and differentiation against big banks and credit cards.

Absolutely. So if a loan is worth a 14% bid, without the City info it would be worth a 16% bid. Fewer lenders will bid at the lower rate, so fewer loans fund. More loans run up against the State caps because they are all higher-risk, Cityless loans (or borrower-supplied City info), so again, fewer loans fund.

Sure, there will always be idiot lenders who will bid down anything with a green bar and a pretty face. But in aggregate there will be fewer bids and fewer loans.

So deadbeat borrowers and would-be scammers are the only winners here.

Prosper, bring the City back.

If Borrower safety is the concern, rather than remove city from the listing, Prosper should stop giving GLs the borrower name, email, and phone numbers.

In theory GLs have a real life connection to borrowers, yadda yadda, but in reality they don't. And all it takes to be a GL is a pulse and an SSN. We know there have been shady GLs (FAN), so if the interest is borrower safety, don't hobble the lenders by removing city (city doesn't really compromise borrower safety) but rather stop giving identifying information to GLs.

How dare you people make good, clear, and even legal sense?

Just to whom do you think you are speaking?

*points to the brick wall in the corner*

A stalker could easily sign up as a lender and locate somebody, given the city info. You can't dream that away, sorry.

In the interest of borrower safety, both GLs and lenders should be in the same boat. If the borrower chooses to publish their profile, so be it. It's their choice.

All borrowers win, when their privacy is increased rather than diminished.

It's a good thing Prosper did this before getting bigger. You note that Ebay does not include city in each listing, for good reasons.

I posted this in another thread on this subject as well....


I've read through all of the posts here and on the other site pertaining to this, and my first inclination was to agree with those who demanded the city field back.

Upon proper rumination however, I realized that; with the exception of finding scammers, every other reason for wanting the city back was at least in part, probably illegal, and would be called redlining.

I'll have to rely on a lawyer for the proper interpretation, but from what I can glean, anything that discriminates against a borrower by location is illegal. And it applies to all lending, not just mortgages.

Prosper, as the lender of record, certainly could not condone the practice, and probably did not want to risk legal action by stating that it was the reason for the change. Any lawyers want to chime in?

As always, just my .02, YMMV.

R

I'm not a lawyer, but I'll state my opinion (because everyone else does :) )
Redlining is making lending decisions based on low class neighborhoods, and is a form of racial descrimination, which is illegal.
But ALL mortgage companies use property location, such as city and county, to decide interest rates. They include it in their risk factors.

Even FHA, a government program, sets lending requirements based on the county you live in. And I know that for a fact, because I initially bought through FHA and was looking at houses in two different counties - and the limits were VERY different.

EBay does allow you to search by distance from your location though... and it gives every member the chance to enter their city (although some enter bogus and vague details, such as "Everytown, USA").

I still think the optimal solution for this would be to let borrowers opt out of showing city information, but make the default setting to show city details.

Think this idea should be pushed bigtime.

Why?

The GL will already know the person that joins their group, and will already know their information ... after all, they recruited the Borrower in the dream world group scenario as envisioned by Prosper in the beginning.

Mortgage lending is rather specialized, and is only one part of redlining. I can understand different limits for different communities, other wise fraud, for example, would be even more rampant. Redlining has come to be defined as the denial of any necessary service (e.g.: loans, insurance, etc.) to anyone based on location only. There is/was even a court case involving WalMart for retail redlining, based on Wal-Mart?s' refusal to build a store in a primarily minority neighborhood, even though the projected financials for building in that neighborhood were better than where WalMart was/is current building a store.

The following is also posted in the other thread here involving location.


Its' my understanding that all personal loan requests (in other words, ALL loans on Prosper) are to be granted (at least legally speaking) on the basis on creditworthiness only, not based on the reason for the loan. I'm aware that the above seems to defeat the purpose of Prosper, but perhaps the legalities (WARNING!!! legalities as I understand them, and I am not a lawyer!) supersede Prospers' stated purpose.

Again, any lawyers willing to chime in?

R

Might this have had something to do with the decision to eliminate the city?

from Smart Money, April 2007, page 97:

When confronted with his first late, Harvey, who is 6-foot-5 and 260 pounds, hopped in his corvette and paid a personal visit to the 21-year-old borrower, a flagrant violation on contacting deadbeats (Harvey says he's not a rule breaker because he didn't actually demand the money). The confrontation was anticlimatic. "I have a job interview next week!" the kid promised. The loan remains unpaid. "If I was a crazy person who didn't care about breaking laws, there's so much that could be done," Harvey sighs.


Personally, someone twice my size showing up on my doorstep asking about my loan would scare the %$^@ out of me.

A poll/thread has been created.

At this time, it has 1 vote yes (mine) - and 1 vote no.

Why am I thinking the early quick 'no' vote is by a shady Group Leader?

From what I heard, the GL already knew the late borrower from a previous meeting.

So how would this be any different then my mother joining my group and getting a loan, then being late on it? Does this now mean I can't visit her until the loan is current?

...Gulp

The city alone doens't identify anyone. Knowing LtDan78 is from Grant, MI doesn't help me find LtDan78 (Grant, MI is less than 1,000) so I can stalk or demand payment.

If I grew up in Grant, I MIGHT have an idea who LtDan78 is if I knew people born around that time and I knew one named dan who was in the military. But THAT info I would know because I deduced it from the username, which the Borrower gets to make up (and can change).

I've always thought the username should just be numbers, so username doesn't contain identifying info (like LtDan78) or a googable trail (like gapeach207).

If users were assigned usernames/numbers and GLs were not given Borrower information (real name, email address, phone numbers), Borrowers would be better protected. And doing so would eliminate the need to hide city from Lenders.

+1 agreed

Agreed Jolla, that would solve the problem. Getting rid of cities gives me less information, and I don't like less.

http://www.geocities.com/Hollywood/Set/4159/PUTBACK.WAV

:lol:

I have offically banned you from my (non-existent) blog. And you owe me a keyboard.

These boards have been better than TiVo this past week. :lol:

Personally, I wouldn't mind if Prosper assigned borrowers a username/number, although I don't really see the need for keeping adults from deciding for themselves whether to use a descriptive user name. However, I would scream bloody murder (not that that does much) if Prosper stopped giving borrower information to GL's. I want the option of limiting my bidding to groups where the GL does substantial vetting, and I don't believe that is possible if the GL wouldn't even be sure who the borrower was.

Unfortunately this issue is dead. The City is gone and it will not be coming back.

I'm going to mentally make up cities for everyone.

Cubbiesnextyr's city would be "Unable to face reality" for instance.

and mtnchick lives in the lovely little village of NOCOOKIE

And Rissaroo is in "I Will Maim You" - not a small village - more of a HUGE city with a relatively bad crime rate - strangest thing.....

Hey, I was the one YOU maimed chica....

That's when I was VISITING your city - I got confused and thought the "Welcome to" sign was threatening me. That and the strange voices in my head.

Ah, yes, those voices.

It took less than three full pages for this thread to devolve to a discussion about voices in your head? <sigh>

To play Devil's Advocate to Ira01's idea: There's information beyond a borrower's name that could be used to find them if their town is known. For example, it's not hard to figure out who owns Joe's Pizza Parlor in Mingo, Iowa, but it might be a bit harder to track down Joe's Pizza in the whole state of Iowa. Likewise for finding a dentist, or person suffering from colon cancer once you know the town they live in.

The thing is though, that tracking down a borrower with the limited information we have still wouldn't be impossible in many circumstances. And, if Prosper is worried about someone losing their marbles, even providing the state is too much information.

At some point, Prosper has to rely on lenders to follow the TOS, just like they rely on the borrowers to keep paying. If Prosper is worried about liability (and bad PR from an unfortunate lender vs borrower incident) then they can:

1) prominently warn borrowers that some scary, unbalanced people are out on the internet, and might be involved in funding their loans
2) increase their collection efforts (and head off the crazies)
3) do more vetting on their own

Are there other options I'm overlooking?

The City is important to Lenders, but Lenders are not important to Prosper (we're replaceable & expendible).

The only arguments that might change Prosper's mind are ones that address how the City will help Prosper with its goals....which are (or should be)?

:ph34r: Short term, the goal is to "massively increase quality listings". Without the City, the new listings are of lower quality. Experienced lenders will only bid on these listings at higher interest rates. New lenders will bid anything up. The marginal lenders, then, are the experienced veteran lenders posting on these forums.

B) Long term, the goal is survival of the P2P concept. What threatens Prosper is the high projected default rate--would eBay survive if it became known that 30% of its buyers would be holding an empty bag? No, they would be roadkill on the information superhighway! Every step Prosper makes should be reduce the default rate (or attempt to).

I think I have had enough of prosper for a while. 2 lates now, one of them I was stupid.
A 3rd one was a clean B and didn't even make their first payment.

I won't put more money here the way things are headed.

-P

Since Borrower Privacy is the vaunted reason for the City removal, I did a search for "city" on the Borrower Forum to peruse the lively discussion and debate:

"Is there some way I can list without displaying my city? I'm afraid if I miss a payment some psycho lender whacko will track me down"

"Dang, that's the third borrower this week that almost listed with my Group, but they got cold feet because their City would be displayed on their listing!"

"Thanks, Prosper, for letting us keep the city information private! Now I feel comfortable to start a listing."

No, these are not actual quotes from the Borrower Forum! I just made them up. :P

In the last 30 days there are only 6 threads where the word "city" appears, for two of which it is part of "capacity". Only this one breaches the topic and there the borrower is concerned that her name and other private financial information will be made public. This borrower joined a month ago and has no listings or loans.

I don't know which is worse, that no borrowers were asking for City removal or that no borrowers noticed when it went away?

The interested reader can go search the GL Forum to read the number of threads and postings dedicated to the City topic. The lazy reader need only remember that zero is a number, after all.

I also would like the city back - even if it is only visable to registered lenders.

I have a few loans where the city was part of the decision process. If all else looks good, a city I have an "attachment" to may be what pushes me to bid where the state is not enough.

Also, when looking at the budget, location in the state definitely gives a sense of whether things look "real".

I only read the first page, so pardon me if this has been suggested already, but couldn't they move the city to the "protected, extended credit data" area of the listing that you have to be logged in to see?

That has been suggested, as well as making it an opt-in for the borrower, much like income range is.

Either would be better than the current situation.

Late May, early June is the ETA according to Prosper John.

I just hope that if they go for an opt in (rather than simply making mandatory city information available only to lenders, as I prefer), that they make it simple to opt in (and preferably, state on the screen where the opt in is made something to the effect that some lenders won't bid unless they opt in, or therwise indicate some advantage to the borrower for doing so). What I'm afraid of, is that Prosper will do something like make the borrower's city appear on their listing only if the borrower opted to display city in their member profile. Most borrowers won't ever go into their profile to change that, because of inertia or a lack of understanding, so that would be a pretty hollow victory for lenders.

The way I play, any profile with a Hidden City needs an extra 2% for me to bid so I'm compensated for the added risk.

If a borrower really wants to hide that information, okay, but the system should display a helpful message like:

"WARNING! Hiding your City Information from Lenders will discourage them from bidding, and may result in your listing NOT FUNDING or being funded at a higher interest rate and HIGHER PAYMENTS! Are you sure?"

Let's drop this topic for now. John Witchel mentioned in the voluminous identity-theft thread that Prosper would do something about this. Let's see what happens before we dwell on this issue any more.

Actually, I think now is exactly the time to provide suggestions. Better that Prosper get it right when putting city information back, than do a crappy half-job that has little practical effect. Once Prosper makes the change, I doubt they are going to want to change it yet again. Especially since Prosper Andrew's (I think) post in the other thread suggests that the upcoming change is going to be exactly what I was afarid of as stated in my previous post in this thread -- simply displaying city info on the listing IF the borrower knows enough to set their profile on their member page to display location. Not very likely, and not very helpful.

On this listing there is the following Q & A:

Q: Congrats on your wedding! Your listing will get more bids and a lower interest rate if you display the City information on your member page. CA lenders (like me) will bid if we know the borrower is local. -mothandrust

A: Thanks for the congrats and the great tip! No problem on the city reveal, consider it done. Local bids are welcomed...... :) Long distance ones too... I didn't know that was holding up anything. Thanks again mothandrust! (May-10-2007)

No thanks necesary, I'm just doing my small part to work around the impediment that Prosper has erected that makes borrowers pay higher interest rates and discourages lenders from bidding on otherwise worthy loans.

On other loan listings, all a lender needs to do is follow this simple 6-step process: ask the borrower to reveal the city information in the Q&A, wait for a response, hope that the borrower can figure out how to unhide the information, then check back on the loan and click on the member page and...oh...sorry, it's too late and the listing has expired. :(

On the other hand, the borrower on this listing would not answer this question about his City in public or private, but he answers 3 other questions.

Q: Would you mind setting your profile page to show your City? It would help you get more bids and a lower interest rate. More info on: http://forums.prosper.com/index.php?showtopic=24729 -mothandrust

Maybe someone with better eyes than me can figure out what that realty sign on the picture says...funny the listing doesn't say anything about buying or selling a residence.

Did Prosper selectively put the city back? How are they deciding which listings will display city and which ones will not?

These listings were from the "Overlooked listings from Prosper" e-mail...
http://www.prosper.com/lend/listing.aspx?listingID=139277
http://www.prosper.com/lend/listing.aspx?listingID=138875
http://www.prosper.com/lend/listing.aspx?listingID=134661
http://www.prosper.com/lend/listing.aspx?listingID=138636

I haven't checked to verify, but before the change they said they were going to make it so that when the borrower selects to display the city in their profile, it shows up in their listing. If they hide it in their profile, it's hidden in their listing.

I had been sending questions to borrowers extolling the virtues of revealing the City on the profile page--they'd set City to reveal, lenders would bid more...and it would work so well that I would be bid out.

My new strategy is on Hidden City listings is to wait until a day or two before the end of the listing and then pop the City question.

On this listing the borrower responded to me privately saying that she didn't know that that was an option and thanked me. But when I went to view the listing...what? it's...still hidden?!

Is this the first Prosper loan where the borrower was aware that City could be revealed and made the conscious choice NOT to reveal it?

I know several that have done that, one girl in particular didn't want to give it out stressed concerns for privacy, she was from Arizona, and then told me she was from Phoenix, but didn't reveal her city...