Get Paid for Turning Your Friends Into Loan Sharks (or Debtors)

Ok, I’m just kidding about the loan shark thing. Most of you have surely heard of Prosper before, but in case you haven’t, here’s the quick rundown:

Prosper is peer-to-peer lending, often called “the eBay for loans.” You can go on there as a borrower and apply for a loan, and lenders will bid on interest rates to fund your loan. Or you can go on there as a lender, and bid on people’s personal/small business loans and try to get a nice return on your investment.

So anyway, Prosper unrolled a new feature for their users: referrals. According to their website, you can get paid one of two ways:

Refer a lender
You receive $25, and your friend receives $25 as soon as your friend funds his or her first loan.

Refer a borrower
You receive 0.5% of your friend’s loan amount as soon as your friend’s first monthly payment clears.

I like this, especially for the “refer a lender” option, because both you and your friend win. For the “refer a borrower” option, you win and your friend ends up with a loan, which is only good if they actually need it.

Here’s my question, though. Are the people you refer in any way linked to your account? I mean, say you went and put your referral link up on your blog, like this:

Stephanie’s Prosper Referral Link

And then someone comes along, signs up with your referral link, gets a loan, and then three payments in, decides to default on their loan. Will that reflect badly on you? Alternately, would a good borrower/lender reflect well on you?

From my preliminary sniffing around, I’d say your referrals aren’t linked to your account in any “public” way. There is an endorsement option you can do for people you know on Prosper, but that’s optional. I’m hoping it stays this way, cause I’d hate some Douchey McLoser to come along and stain my reputation.

Well, I’m going to go convince my mom to sign up for Prosper now. Maybe my sister, too. I bet The Boyfriend might be interested… woohoo, $75, here I come!