While I appreciate your response. Perhaps you could explain better your business plan; as well as how your terms of service will work under a system where BLC act's as the agent; and the lender is expected to deal directly with the borrower - yet not be provided with any of the "fact checked" information they provide upon registration.
Our default notices now contain all of the information which was missing in yours. The reason is that we currently ask the user to enter that information and our support staff verifies it against the documents they've submitted, this is automatically populated in the notice of default. At the time your borrowers filled out the loans, they didn't have to enter that information manually. We do have the IDs and the other verification documents of the lender, so if you send us an e-mail at support we will manually issue the missing information:
support@bitlendingclub.com- You mentioned you can no longer simply hand over personal information like you have done in the past. I don't see how your user agreement couldn't cover this in terms of a release agreement with the borrowers. It's a TOS issue. Borrowers consent that in the event of default the information they submitted shall be provided in whole or in part to the lenders in order for the lenders to collect on the debt. It's as simple as that. If you arent going to hand it over, why even collect it?
There are legal restrictions for storing and disseminating people's documents. We collect the information in order to guarantee that people don't create multiple accounts, they are who they say they are, and so we can populate the notice of default, whenever one arises.
- Either your site is going to back and guarantee and handle the collection of bad debts - covering the legal expenses to boot - or your site will be one where your borrows guarantee themselves and the lenders must handle all disputes and defaults. It's one or the other.
That's ultimately the goal, we would like to get there and we've been trying to see if we can aid the collection of a couple of loans. However, going after the borrowers is quite expensive, so it generally makes more sense to focus on prevention in the short term and collection in the long term. One of the changes we're making is to change the income requirements. Up until now we allowed people with 0 income to get loans, this was because many in the Bitcoin community were miners, sellers on local bitcoins or people undertaking speculative ventures in order to cover the high interest rates. That's about to change very soon, we're now going to be more strict with the income verification and we'll be increasing the quality of borrowers on our platform.
- Since you have stated that your standard operating procedure moving forward will not include providing contact and personal information about the borrowers in the event of default; I don't see how lenders will have any recourse whatsoever. Please explain what how BLC will in any way aid recourse options to lenders in the event one of their loans enters into a default situation.
- Under your new TOS how will disputes be settled?
I should note that when I said "personal information" I mean that we wouldn't be sending out a copy of the verification documents. We will still send the notice of default, which have all of the information which was provided by the borrower and verified by our support staff. So dispute resolutions should be done with the notices of default. I'm going to explain what we're doing in order to help with that too (see below).
- Your explanation is that you are "overhauling" because you've realized it's the lenders lack the ability or didn't do their own due diligence in terms of the burden to background check the borrowers - which is impossible based on the fact that no information is given prior to the loan other than profile links, doesn't add up. Your site clearly states that information is required from those who borrow; yet the document provided even under the old system shows major flaws in your system... as in the information isn't even there. The document I was provided; can you comment on the gaping holes it contains? I'd love to see a scan of the Driver's License. Blur out the information - but what was actually collected?
As I said earlier, the documents are automatically generated from fields which are filled out by the borrowers. The information is available on the verification documents submitted, but we have't gone back and manually entered the information so we can re-generate the notices of default. You can contact support and we'll do that on a case by case basis, until we're done with the manual data entry. All of the information is available to us, it's just a matter of time before we can go through all of the documents and perform the data entry.
- Personally I'm not going to waste my time trying to track down someone halfway across the world to recoup a few bitcoins. But I think your explanation of "We're overhauling the system and are making progress" sounds like you really haven't done anything and don't have a clear plan of action moving forward. This poses a risk to anyone considering joining your site.
Given that we have a total of 10 people working for our company, including myself, it's going to be pretty difficult for us to do that too. I've already contacted several collection agencies, but they don't seem to be interested in collecting such small amounts. I'm still looking for a collection agency that can help us, at least within the US. We've also taken a couple of loans which borrowers have defaulted on and we've contacted the lenders: we asked if any of them could take point in the collection process, given that they're geographically close enough to the borrower. Out of nearly 140 lenders contacted, only a couple expressed interest in taking point and they were quite far from the borrower. They weren't able to follow through in getting a sheriff to serve the court papers, going to court, waiting for a judgement, filing for wage garnishment/property lien, and keeping everybody up to date.
- As a hypothetical; (and I stress this as a hypothetical and in no way an accusation of wrongdoing by BitLendingClub) - But you have to admit: There is no way for lenders to know if the profiles created as borrowers are not merely BitLendingClub acting as real people (you; yes you); this of course - hypothetically speaking - in a scheme to fraud investors out of their funds. I stress: this scenario is not an accusation by any means; but if you are not going to provide the information of the borrower to the lender; not back the loans at least with a trust fund which limits loss; then how are users to ever know what to believe? How will this new system better provide accurate credit ratings on their users? What fail safes are you planning on implementing into the system in order to mitigate losses on the lenders end? How will you; in this global virtual currency ecosystem - realistically confirm the information borrowers provide as their "documentation" are not merely fake profiles purchased here or on Reddit; with some photo shopped documents?
While I understand your concern, there is very little chance that we can realistically do that. If that was the case, then you would see massive discrepancies:
- The majority of the information provided by the borrowers will not match the social connections, trusted connections and public communications.
- We would have to find fake/stolen IDs, which we pass onto Jumio (since we verify the documents both manually and through Jumio).
- We would have to acquire a large number of phone numbers, from multiple countries (I don't even know how one would do that).
- We would have to acquire a large number of social profiles and matching accounts from Amazon, eBay, PayPal, LocalBitcoins etc.
- Our company of 10 will be tasked with managing and maintaining fake communications for over 900 profiles (this is the number of verified customers we have).
- When we release the notice of default, the information would not match any of the factors above.
And that's just for starters... if this is a real concern with BitLendingClub, then I guess that's a concern that would exist with any lending marketplace, even with Lending Club and Prosper. However, a company that is legally registered and has VC backing is not going to take a risk of defrauding its customers or investors. I would be liable if I or any of my staff lied to investors and customers. And trust me, we've dealt with so many lawyers and signed so much paperwork in the past year, that it would make very little sense for us to even think about taking that kind of risk. BitLendingClub is a registered business in the state of Illinois, we also have LAUNCHub invested in us and we're now a part of Boost VC's accelerator program (founded by Adam Draper). The long-term potential for growth within our company greatly outweighs the potential for short-term from scamming people.
The Bitcoin community as a whole has been plagued by scams and fraud since inception.
I simply don't buy your response- or if that is your response; this site lacks any real form of protection and should not in any way be branded an "INVESTMENT" site. It should clearly state: Loan Money to Strangers. I think your Business Plan and PR Plan really need some work.
We saw a problem, which was the need to have a lending marketplace for Bitcoin and we built the platform. I've personally invested well over $200K in building this site and I'm quite far from getting a return on my investment. However, I understand that if I want to recoup any of my $200K+, our website would have to turn profit for the lenders. We can't possibly guarantee returns, because that would simply be a lie, so we've been doing everything we can to improve our platform. Quite frankly, it's not as easy as it looks, but we do make a concentrated effort to work with the lenders as much as we can. We have limited resources, so we have to rely on the community a lot more than we'd like to.
Lastly; I am curious. You mention an overall default rate of 7%. Can you please break that down: Number of Loans; Number of Loans Current; Paid; Past Due; Deafult - and then as a separate column provide the same stats for BTC/FIAT in Paid; Current; Past Due or in Default. I'm not sure what the 7% represents - number of loans; or amount of funds. Are you including past due figures? I have loans on my profile that are MONTHS past due and not marked as in default.
Strato
Our new filters allow you to inspect all of the loans.
If you filers for loans which are late and default, you will see that there are about 322 of them (USD and BTC):
https://bitlendingclub.com/loan/index/filters/1/filterName//statuses/2/amount/0.00000000%3B0.00000000/reputation/-2000%3B2000/timeLeft/0%3B0/paymentStatuses/2%2C3/btc/true/usd/true/invested/true/notInvested/true/funded/0%3B0/ratio/0%3B0/perPage/250/show_filter/If you filter for loans which are funded or repaid, you will see that there are over 4000 (USD and BTC):
https://bitlendingclub.com/loan/index/filters/1/filterName//statuses/2%2C3/amount/0.00000000%3B0.00000000/reputation/-2000%3B2000/timeLeft/0%3B0/paymentStatuses/1%2C4/btc/true/usd/true/invested/true/notInvested/true/funded/0%3B0/ratio/0%3B0/perPage/100/show_filter/
