Less than a week ago, the nation experienced another mass shooting, this time in San Bernardino. While that has been all over the news nationwide, what you may not have noticed was the fact that one of the shooters likely took out a massive loan from one of the P2P industry leaders, Prosper. Peter Renton of Lend Academy has been conducting interviews and has brought up important questions he keeps hearing during them:
- Is P2P lending going to become the new way for terrorists to get funding?
- Prosper must have really low standards to allow a loan like this to be approved, right?
- Shouldn’t the government crack down on these unregulated lenders like Prosper?
These are justifiable questions in the face of and as a reaction to this tragedy, but taken out of the circumstance and looked at objectively, they’re pretty unfair.
Think about it. P2P lending is a tool, similar to the internet. Could they both be used for terroristic acts? Sure, they’re both very versatile and there could be people willing to abuse the tools in that way. But that’s not the point nor the main use of it. Whereas the usual uses for P2P lending are pretty good ones, like funding small businesses and individual entrepreneurs (the bread and butter of the American nation).
Secondly, Prosper does not have low standards to allow loans to be approved. You’ve got to remember that, when you hear news, you have to do a fact check for yourself. The first news group to report this finding was Fox News; they’re labeled as an entertainment network, not a news network. So keep that in mind. The man who got the loan? Perfectly clean and acceptable record; nothing to throw up any warning flags. Blaming Prosper and the P2P industry for giving that man money would be like blaming the Lowe’s an axe murderer bought his axe from.
Lastly, the P2P industry in America is far from unregulated. There have even been case studies that point to it being over regulated compared to what we see in Europe, where the industry is even larger because of it.
In conclusion, questions like these arise from emotions, specifically fear and anger at the tragic event that occurred. They’re really just looking for somewhere to point the blame. What people need to remember is to think rationally. Peer to peer lending is a versatile tool and, like all tools, can be used to do good things and bad things. There are good regulations and standards in place to try to prevent people from using said tool in a negative way, but it comes down to a cultural/social problem, rather than a problem with the business model that, in this case, happened to enable something terrible.
