I remember reading the T&Cs for one of these 'marketplace lenders'; they would do collections for the lender, if the borrower was 60 days late (which doesn't ev

I remember reading the T&Cs for one of these 'marketplace lenders'; they would do collections for the lender, if the borrower was 60 days late (which doesn't even seem that late). But the lender would get nothing, setting up a huge conflict of interest for the marketplace: they could make a lot more money on a loan in default than a successful loan. Wild West indeed. Edit: Yuk.. "Currently, Lending Club charges investors... 18% of the amount recovered if the loan is 16 or more days late and no litigation is involved". In other words: an automated-payment screws up, Lending Club sends a letter to the borrower, who fixes the problem: Lending Club takes 18% of the principal. https://www.lendingclub.com/public/rates-and-fees.action https://www.lendingclub.com/public/rates-and-fees.action