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Financial scams are all over the internet and you have to do your research and be very wary of any company that promises you a great deal on a loan, suggests a great new investment opportunity or says that they’ll fix your credit problems over night. When Prosper Loans came on the market, they set off red flags for many by offering highly competitive interest on loans to borrowers that are funded by individual investors. Many asked outright, “Is Prosper Loans a Scam?”

The answer to that question, is no. There is no Prosper Loans Scam. Prosper Loans is a San Francisco-based lending company that operates under the regulatory authority of the Securities and Exchange Commission, as well as the financial regulatory bodies in each state that they do business. Prosper is required to meet certain lending regulations to protect borrowers in the 47 states that it does business in.

Prosper Marketplace is also ranked by the Better Business Bureau of San Francisco. The Better Business Bureau has given Prosper a rating of B+. The company, which arranges millions of loans between borrowers and lenders on its marketplace each month, has only gotten a handful of complaints by way of the BBB. There are currently no open complaints against the company with the Better Business Bureau.

If you’re thinking about getting a loan from Prosper, you’re experience will be very similar to that of getting a loan from a bank. You fill out an application online and are quoted an interest rate. If you choose to take out the loan, you‘ll go through a funding process in which investors put money toward your loan. After the funding process is complete, your funds will be transferred electronically into your checking account. It’s a simple and straightforward process.

If you are thinking about investing in loans on Prosper, you need to be much more careful. Early lenders did not have a good experience in making loans on Prosper. Many lost money as a result of the truly free market in which Prosper operated under. The company has since reformed its lending criteria and investors appear to be getting much better rates of return than they did previously. You should read experiences and reviews of the company written by actual investors before thinking about any money put in. There is risk involved, like all investments.

Prosper Loans isn’t a scam. If you’re a borrower, you have no reason to be concerned. If you’re a lender, consider peer-to-peer loans from Prosper an alternative investment. There is opportunity, but there’s also risk.

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