Savings Builder

Are Prosper Loans Safe or a Scam? Is Prosper Legitimate? Prosper BBB Rating.



Are Prosper Loans Safe?


Peer-to-peer lending is a relatively new industry that has been around for about a dozen years. Naturally, a lot of people are apprehensive about trusting their hard-earned cash with new concept firms that are not as well-established as traditional financial institutions. It also often sounds too good to be true: while most brick-and-mortar banks pay close to 0% interest on customers' cash, and even the highest yield online-only banks such as CIT savings is paying only 1.85% , it's hard to believe that somewhere you could learn 4.00% - 8.00% APY on your money or get a loan of up to $35,000 at low, fixed rate.

So our readers often ask us: Is Prosper.com a fraud? Is Prosper safe for me to open an account, to trust my savings, or to get a loan? Is Prosper account FDIC insured? Well, in short, Yes, Prosper.com is a legitimate company (there is a caveat, mentioned below), and we have had account with the firm since 2011.

Another question we often get: are their rates real? Well, we didn't use Prosper as borrower, only as a lender, and we earned about 5.7% APY this year. In previous years these rates were even higher. Prosper.com returns definitely beat all the CDs rates available right now!


Is Prosper a Legitimate Firm?


Prosper is pioneer in U.S. peer-to-peer lending and it allows investors to offer loans directly to borrowers and earn an interest rate on these loans. In a nutshell, their website gives investors an opportunity to be a bank, evaluating risk and approving loans in order to make a profit. Investors get shares of consumer loans, funding as little as $25 per loan to build a diversified portfolio of loan shares. Prosper was founded in 2006, and it has been one of the leaders of the peer-to-peer lending market. It did have serious challenges, including a shutdown in 2009. The firm generated $12 billion in loans to more than 770,000 people.


Prosper loans scams


Is Prosper Insured And Regulated?


Prosper is NOT a member of FDIC - it is not a bank. All Prosper personal loans are unsecured, fully amortized personal loans. Some of them will not get paid back. That's why it's important to invest in as many loans as possible, and, probably, pick lower risk borrowers (this is what we did).


Prosper BBB Rating and Complaints


Prosper BBB (Better Business Bureau) rating is A+. The link to Prosper Better Business Bureau page is here »

In total there are 181 closed Prosper BBB complaints in the last 3 years. The breakdown of Prosper complaints: Problems with Product/Service - 83, Advertising/Sales Issues - 71, Billing/Collection Issues - 20, Delivery Issues - 3, Guarantee / Warranty Issues - 4.

With so many clients on both investing and lending sides of business, the fact that Prosper's Better Business Bureau rating is A+ speaks a lot about the company.


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