> In what case would you be able to fool Prosper or LendingClub but not a traditional credit card company? Couldn't they just adopt similar lending standards?
Traditional credit card lending standards are adopted because the issuer is the lender, and directly bears the default risk. On a peer-to-peer service, the money being lent is Other People's Money, and Other People bear the default risk. The incentive, then, is to leave it to those Other People to set lending standards that will protect their money.
Traditional credit card lending standards are adopted because the issuer is the lender, and directly bears the default risk. On a peer-to-peer service, the money being lent is Other People's Money, and Other People bear the default risk. The incentive, then, is to leave it to those Other People to set lending standards that will protect their money.