I was tooling around on Google earlier this week and I noticed this screen above. When you type the term “Lending Club” into the Google search box Google tries to anticipate what you are really wanting to know. So it provides some suggestions.
The graphic above shows the top four suggestions that Google thinks is relevant. The first two are what you would expect. If someone types “lending club” into the search box then they are likely looking for that actual term or a review of the site. But many people might be surprised to see that “scam” and “complaint” are the next two most likely searches.
I did a little more digging and decided to check out the monthly volume of these searches that you can see in the table below. Sure enough the vast majority of people are looking for just “lending club” but 2,400 searches a month are for “lending club scam” and 720 searches a month for “lending club complaints”.
My Theory on the Lending Club Scam Searches
I have a theory as to why there are so many searches for “Lending Club scam” and “Lending Club complaints”. While some suspicious investors will just type that into Google to see what they get, others are likely doing it out of a real concern.
A few months ago I applied for a loan on Lending Club. Now, my credit score at the time was 815 and I applied for a $2,500 loan. Lending Club rejected my application outright. If I was counting on that loan I would not have been a happy camper. How could Lending Club possibly reject me? My credit is perfect, I have not had a late payment on any account for over 15 years (my problem was that I am self-employed). I might start to think this whole peer to peer lending thing is a scam.
There are around 20,000 loan requests denied every month on Lending Club and that number is climbing. Some of these people will be very disappointed and angry to have been denied a loan. It is only natural that a portion of these people will turn to Google and see if others have had similar experiences. I get emails at least twice a month from irate borrowers who have found me on Google and who can’t believe that Lending Club turned them down for a loan.
And Yes, Prosper.com is a Legit Website
Lucky for Prosper they don’t have as much of a problem here. You have to add a .com on to the search because prosper is such a common word. But the only negative thing that comes up is the fourth option “prosper.com legit” which brings up a number of sites that wonder about Prosper’s legitimacy. Given their checkered early history with investors I would have thought more disparaging searches may have come up here.
So, for the casual searcher that might have stumbled across this post through Google you can be rest assured that both Lending Club and Prosper are indeed legitimate businesses. They are regulated by the Securities and Exchange Commission and between the two of them they issue tens of millions of loans each month. But they do have fairly strict underwriting standards so if you don’t have decent credit you may well be disappointed when applying for a loan.
Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.