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Comment by patio11 | Hacker News Reader

I'm really sorry that Prosper didn't prosper, because I thought that P2P lending would be an excellent alternative to payday loans. It made huge sense to me that if one person in a community has money and one person in a community needs money, then if they trust each other, one guy pays a modest APR and everyone walks away happy.

As it turns out, Prosper couldn't beat the payday loan companies because the people who need payday loans are atrocious credit risks and they collectively relieved us lenders of hundreds of millions (cough, not a typo) before we wised up about this.

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Incidentally, if someone wants to brave formidable regulatory barriers, beat Paypalian levels of fraud, and spend their days dealing with the problems of the underclass, this is a multibillion dollar opportunity and you'd create more wealth for the poor than anyone since Walton.

Lending Club? (I've invested in both Prosper and Lending Club)

The problem is with payday loans, that one party can not really be trusted. This is one of the reason the rates are so high, so many people default. People who can not manage their money are not the best of people to lend to.

People who can not manage their money...

I realize that this is sort of a personal nitpick and that it does nothing to invalidate your central claim, but when you make minimum wage and your car breaks down there's not really any money to manage. The thing about living paycheck to paycheck is that unexpected expenses are insuperable (by definition).

As far as I know, most people who live paycheck-to-paycheck are not in that situation because they have simply not yet succeeded in their repeated, rational and wholehearted attempts to improve their situation. Most are there because they don't know how to get and hold onto money.

Prosper is still prospering, and some of us who are more choosy about our loans are still investing.

Prosper's certainly not making any money itself. What happens when Prosper is out of business? You should try LendingClub instead-they're finally moving toward profitability, and most lenders at LendingClub actually make money on their loans.

LendingClub is hardly flawless, for example verification of potential borrowers' income as presented to lenders is voluntary for borrowers, but the platform allows lenders to question potential borrowers and pressure them to verify income.

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